Crude Oil Price Outlook – Crude Gives Back Initial Gains on Monday

WTI/CL Technical Analysis

The crude oil market initially gapped higher in the light sweet crude oil grade, only to turn around and show signs of weakness again. This is a market that, of course, is going to be paying close attention to the Middle East, but it’s somewhat remarkable that we have fallen this far. At this point, I suspect that a lot of people probably are more or less just suggesting that they’ve got decent profit and it’s time to step away, collect those profits and perhaps try to buy the dip again.

There are going to be plenty of headlines coming out of the Middle East that will eventually move this market. And we had, before any of this happened between Israel and Iran, formed an inverted head and shoulders, which broke higher. Ultimately, this is a market that is buy on the dip. And typically, this time of year, crude oil is fairly strong anyway. So, light sweet crude should do okay over the next several months, but we are just in an overbought condition at the moment.

Brent Technical Analysis

The Brent market also gapped higher only to plunge and now it finds itself heading into the New York session right around the $73 level. The market looks as if it is doing everything it can to find some type of reason to bounce and it probably will sooner or later. We are sitting just above the crucial 200 day EMA, and that of course attracts a lot of attention as well.

With that being said, I think you’ve got a situation where the crude oil market probably goes looking to the highs again near the $78.50 level. In the meantime, though, I do think you need to let the market bounce and show its momentum. I wouldn’t just jump in out of the blue, but clearly, we have broken much higher and working off some of this froth I think makes a certain amount of sense.

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