Crude Oil Price Analysis – Oil Drops from Overextended Levels

Crude Oil (WTI) Technical Analysis

The light sweet crude oil market has initially rallied during the trading session on Thursday, but then gave back gains to show signs of hesitation and exhaustion. This makes a certain amount of sense because we have gotten so parabolic that we would get a bit of a drop. Whether or not that continues to be the case remains to be seen, but I think crude oil is just finding its way through an extraordinarily messy type of consolidation that is huge, and I think that’s just the way this is going to be for the foreseeable future, as there is so much uncertainty in the way of traders placing bets of consequence.

Crude oil itself is moving on the latest headlines coming out of the Middle East, but I think you have to look at this as a market that could very well go looking to the $100 level at this point, barring some type of jarring headline. You have to be very nimble to trade oil these days.

Brent (BZ) Technical Analysis

Brent markets look pretty much the same; I think a pullback towards $105 makes quite a bit of sense as we are getting fairly close to the top of the range previously in the session. Pulling back from there did make sense.

The question at this point in time is: can we continue this type of movement? I think we don’t have a choice. As long as there is no real clarity in how the Middle East shakes out, it’s going to be very difficult to really get oil to behave.

It is worth noting that OPEC+ did vote for an increase in output, so that is part of what’s driving this, but really, at this point, I think it’s still about those headlines coming out of the Strait of Hormuz and the global supply chain when it comes to petroleum. This will be a running theme for months, even if the war does in fact stop.