Crude Oil Rebounds from Key Support as Middle East Risk Rises

WTI Crude Oil Technical Analysis

The light sweet crude oil market has rallied a bit during the early part of the trading session here on Tuesday as escalation continues to be a major problem. With the Iranians and the Americans throwing missiles at each other again, albeit in a limited fashion, this has people concerned about the flow of oil. There’s still 6 to 8 million barrels of oil missing every day in the Strait of Hormuz, and that of course, is a bit of a major problem.

Ukrainian drone strikes have recently hit Russian refineries and the tankers and pipeline infrastructure at least 30 times in July. Crude processing averaged 3.51 billion barrels per day in July, a 24-year low in Russia, a 6-year low on OPEC secondary source estimates. So really at this point in time, the Russian situation isn’t getting any better either.

Geopolitical Escalation and Technical Support

With that being said, it continues to put a little bit of a floor in the crude oil market, and it’s also worth noting that we bounce from the 200-day EMA to show signs of resilience. The Brent markets are doing very much the same, and this market right now is one that is just bouncing around trying to determine where to go next.

The market is more or less being held hostage by these headlines that pop up randomly out of the Middle East, and if that’s going to be the case, it’s simply a reactive market. It’s not a proactive market, and you have to understand that is the regime you’re in at the moment.

A sudden headline could cross the wires and send the market $5 in either direction. That’s part of why I think we’re compressing. There are a lot of people out there right now who just simply don’t know what to do.

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