Crude Oil Price Analysis – Oil Plunges on Signs of Peace to Test Support

WTI Crude Oil Technical Analysis

The light sweet crude oil market has plunged during trading on Wednesday as it was announced that the United States and Iran have made more progress on peace talks. But we’ve since seen the market bounce a bit and I think part of this is because we’ve seen this story more than once.

And with that being the case, I think that the initial reaction, which makes sense, the reality is all it would take is one statement, one missile and the whole thing falls apart and that’s happened multiple times. So, bouncing from the 50-day EMA makes sense, especially considering that we had pierced it and went down towards the $87.50 level, which is getting close to the bottom of the overall range anyway.

So, as I’m watching oil, I’m noticing we’re bouncing again. So, I think we’re just going to stay in this range. After that wipeout, I’d be looking for potential buying opportunities, assuming that there aren’t more headlines that are peace-oriented. And at the first signs of trouble, oil is just going to turn right back around.

Brent Crude Oil Technical Analysis

Brent pierced the $100 level, touched the 50-day EMA and turned around again. With that being the case, I think you’ve got a situation where traders are looking at the $100 level as a significant floor in the market right along with that 50-day EMA. Brent’s going to have a little bit of a premium to West Texas Intermediate just because of geography.

But really, at this point in time, it looks to me like we’re just trying to hang on to this range. And while people got excited and that was good news, the reality is nothing’s really happened yet. It’s just a termination of the Operation Freedom situation in the Strait of Hormuz, but the Americans still have it closed down, so we basically just rewound time like 10 days. So, with that, I think there are still buyers out there, I think there’s still plenty of uncertainty.