Crude Oil Price Analysis – Crude Oil Sees Swings in Early Trading

Crude Oil (WTI & Brent)

The light sweet crude oil market spiked after a couple of oil tankers were attacked in the Middle East during early trading on Thursday. The market has since pulled back a bit as we are trying to sort out whether or not the flow of oil is going to continue to be disrupted or if it is going to be freed through the system and drive pricing back down.

With the hot war in the Middle East, of course that is a moving target and therefore you will continue to see a lot of choppiness.

Market Support and Risk Management

This is a market where I think the $78.50 level continues to be a major floor, and so even if we do collapse again, I don’t really think that area gets violated. There is going to be a bid regardless, but if you are trading crude oil, the number one thing you can do here is cut your position size down.

Brent markets look very much the same, with $85 being a support level. The $85 level is an area that I think we could get back to if we get another one of these wild swings, because, quite frankly, the oil markets are moving on the latest headline, be it good or bad.

We are trading on emotion, not reality, so keep in mind that market participants are going to continue to be very nervous individuals and therefore “buy on the dip” probably makes the most sense here, but a small position size is necessary.