Crude Rises as Middle East Tensions Escalate

Crude Oil Technical Analysis

The light sweet crude oil market has broken above the 200-day EMA to challenge the 50-day EMA early on Tuesday as the tensions in the Middle East are only getting worse, not better. Therefore, it makes sense that traders are concerned about the price of oil.

At this juncture, the 50-day EMA seems to be offering a little bit of resistance, but this is more about traders reacting to the Americans and the Iranians trading missiles again. As long as that’s the case, there’s a very high possibility that oil will continue to be buoyant.

The market typically tries to find a summer range, but this year, that range may be a lot bigger than we’re used to. When we fell to the $70 level, I had previously suggested that I was going to look for the range to play out and that to be the floor. So far, that’s been true, but we haven’t found the top. As long as there are concerns in the Middle East, it is more of a reactive market, would be my assumption, than a cyclic one.

Brent Technical Analysis

Brent has broken above the $85 level and the 50-day EMA to show signs of strength yet again. With the US dollar weakening a bit due to the Consumer Price Index being a little lower than anticipated, it’s worth noting that this is a market that is priced in dollars, so that does help the situation.

I think that momentum has certainly shifted towards the buyers over the last couple of days. I think at this point we are a little stretched, but it wouldn’t take much in the terms of surprise headlines coming out of the Middle East to fuel a move in either direction. That seems to be the game we are playing.

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