Crude Oil Price Outlook – Crude Oil Jumps on Thursday

WTI/CL Technical Analysis

The light sweet crude oil market has jumped significantly in early trading, gaining about 5 % as we slam into the 50-day EMA. That being said, some of this comes down to sanctions. But really, at this point, I believe this is a short-term knee-jerk response. The market has plenty of supply and Russian oil, despite the fact that it gets sanctioned, somehow finds its way into places like Greece, India, and Turkey.

So I think ultimately this is probably a bounce from an oversold condition. I still look at this as a market that you could be fading at least until something structurally changes. US sanctions against Russia have so far been proven to be somewhat wanting. And I still think the overproduction from the US and OPEC could come into the picture and push this lower. We’ll just have to wait and see. If we break back below the $60 level, then we could really start to fall.

Brent Technical Analysis

The Brent market has jumped as well, and it is now testing the 50-day EMA. It’s probably worth noting that we’re already seeing a little bit of pushback here. And in this environment, I would anticipate a little bit of a lid. That’s not to say that we can’t go higher. Obviously, we can. I could be completely wrong about this. But ultimately, I can only go from history, and the recent history has most certainly been negative.

You could probably even draw a Fibonacci retracement level from the latest drop, and right there, you can see the 50% Fib, a test to the 61.8% Fibonacci retracement level, so it all kind of comes together. While I’m not overly bearish and I don’t really like shorting commodities, the reality is I wouldn’t be chasing this market here. I think a little bit of range-bound trading is more likely than not going to be the case with a bit of a ceiling.

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