Crude Oil Price Analysis – Crude Oil Continues to Threaten Breakout

WTI Crude Oil Technical Analysis

Crude oil has a bit of choppy volatility early on Friday. The light sweet crude oil market has been a little bit negative in the early hours on Friday, only to turn around and show signs of life again. The $66 level above has offered significant resistance, and I do think that this is an interesting market to watch because there are a couple of different things going on at the same time.

The first one of course would be that geopolitics are driving price action as there are a lot of concerns about the United States hitting Iran, maybe even over the weekend. That being said, if we do break out to the upside, I think it is somewhat limited due to the fact that there is a serious oversupply of crude oil.

I anticipate that we will see something like when Israel hit the Iranian military; we saw a massive spike higher and then the realization that they did not hit anything oil-related and then we just fell apart. I anticipate something like that happening if that does in fact end up being the case. After all, we have far too much in the way of supply out there to really justify huge price swings.

Brent Technical Analysis

Brent markets look very much the same and again I think it is the same nonsense with the Americans who will not destroy the oil infrastructure. The fears of the Iranians shutting down the Gulf of Hormuz—which I am almost positive the American military would sink anything in that strait if it started blocking the route—this of course is not the 1970s. I think it is a different regime at the moment.

On top of that, it would take a lot to truly lock up oil around the world. So, with that being the case and the fact that the United States is becoming more efficient with its drilling, I am still looking for a selling opportunity. I recognize that we have been moving on geopolitics as of late and that is fine, but I think the longer-term fundamentals still suggest that oil will eventually roll over.

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