Crude Oil Price Analysis – Oil Drifts Lower on Peace Hopes

WTI Crude Oil Daily Chart

Crude oil has drifted a bit lower in the light sweet crude oil market as we are now testing the 50-day EMA, which offered support during the Wednesday session and now looks like it’s trying to do so on Thursday. We’ll just have to wait and see. I think there are a lot of traders out there that don’t really know what to do with the crude oil market at the moment, as the United States and Iran seem like they’re heading closer to peace, but the reality is, we get a lot of mixed messages and it wouldn’t be the first time that was said and then something happens.

With that, there is a lot of caution out there and I think part of what you’re seeing is probably just people closing out longs. It’s probably best to avoid getting too overly exposed in one direction or the other. If we were to break down below the $85 level, that could be rather negative, and I think that opens up a move down to the $75 level, where you have the 200-day EMA. A bounce from here could go looking to the $100 level, but that’s probably going to be driven on headlines.

Brent Crude Oil Daily Chart

The Brent market is currently testing the 50-day EMA as well and is below the psychologically important $100 level. If we continue to go lower from here, I look for support near $95. If we break that, then $85 is probably where we end up. Again, the biggest problem you have is that it only takes one tweet or one errant comment to send the market on fire again.

To the upside, if we rally, the $110 level could be a target. I think essentially, we’re somewhat range bound in these markets until we get some type of clarity as to what’s actually going to happen with the conflict in Iran and the Strait of Hormuz.