Crude Oil Price Analysis – Crude Oil Skyrockets

Crude Oil Technical Analysis

The light sweet crude oil market has broken out pretty significantly during the trading session here on Friday, as it looks like we are, in fact, seeing a bit of panic in the oil market due to the war and, perhaps more importantly, the closure of the Straits of Hormuz.

The question now is whether or not the market sees this as a long-term problem or short-term problem. Quite frankly, the simple solution is to sail around Africa. Obviously, that causes major disruptions, but in the longer term, that would be a viable solution.

Also, this is assuming that the insurers will never insure boats again and I think really what we’ve got is a scenario where eventually you get a nice selling opportunity. But unfortunately, I will get emails on Monday or maybe Tuesday where somebody chased crude oil up 15% and wants to know what to do about their account that is about to get liquidated. And that’s the lesson here. You either caught this move, or you did not.

Breaking above $78.50, an area that I had mentioned multiple times previously, was a good sign that could send this market, I believe, I was calling for about $85. We’ve hit that and more now. So, I think the next target, based on longer-term targets, will be $90. I would anticipate seeing a bit of resistance there.

Quite frankly, when you look at crude oil charts, despite everything that’s going on, we’re just back to autumn of 2023 levels and, in fact, are still somewhat below them. So, while this has been an explosive move, it’s not going to be the problem I think a lot of people think it will be longer term. This is a short-term panic.

Brent Technical Analysis

In the Brent market, we are now testing $90, and again, if you look at the longer-term charts, we are approaching pretty significant resistance from 2023. The Brent market is leading the way, typically, and that does make sense considering that the light sweet crude oil market is basically North American, and this is a little bit more global. This has a little bit more to do with what’s going on geopolitically.

All things being equal, if the market were to show signs of exhaustion, you have to be careful. I do think there is a point where you short this market and you make a boatload of money, but you need a succession of good news coming out of the Middle East, perhaps a ceasefire, some type of peace agreement, something to that effect. I think oil collapses. That being said, in the short term, it’s a very difficult and dangerous market. One would assume $85 ends up being supported. $100 is a possible target, but that obviously should cause quite a bit of resistance as well.