Crude Oil Price Outlook – Crude Oil Continues to Chop on Tuesday

WTI Crude Oil Technical Analysis

The light sweet crude oil market has pulled back just a bit in the early hours on Tuesday, only to turn around and show signs of life. The downtrend line and the 50-day EMA both coincide roughly with $60, which of course, will be an options barrier. And I think you’ve got a scenario here where we could rally toward there, but at the first signs of weakness, I’d be interested in shorting.

I don’t think it’s a long-term trade. I think this is just a market that is suffering from an oversupply of crude oil from OPEC, the United States, and Russia. While Russian sanctions came to fruition and we saw the market jump, the reality is that Russian oil is still being bought even in places like the European Union. As long as that’s the place where the market sits, it’s difficult to imagine a sudden shift in momentum. I think fading the rallies continues to be the way forward.

Brent Technical Analysis

Brent markets, of course, aren’t going to be any different. They have a downtrend line and a 50-day EMA sitting right around $64 that could cause headaches. It’s really not until we break above $65 that you have to start to think maybe something’s changing. Volume is pretty steady, and I think it’s basically just a trading instrument at the moment, although I would suggest short-term. This is not a long-term trader’s type of market, at least not at the moment.

With this, I think we could revisit $60 eventually. But I think it’s a slow, gradual decline. I imagine that this channel probably holds fairly well between now and the end of the year, unless, of course, there’s an external factor. There is the FOMC interest rate decision on Wednesday. And if they sound ultra dovish, that could send oil higher, just on the expectation of more demand in the future, but those moves are typically pretty short-lived.

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