Oil News: Crude Oil Analysis Signals Bullish Momentum Toward $100

WTI Touches $95.97 as Brent Breaks $100 Despite Strategic Reserve Releases

West Texas Intermediate (WTI) crude oil futures are higher on Thursday after touching $95.97 overnight while Brent crude oil surged over the $100 a barrel mark. The market rallied despite both the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) announcing releases from their respective strategic petroleum reserves. Since these releases will take place over time, the U.S. release, for example is 120 days, traders don’t see any immediate impact to current supplies. However, I think it sends a message to traders that the war between the United States and Iran could take months rather than weeks.

At 13:48 GMT, April WTI crude oil futures are trading $93.93, up $6.68 or +7.66%.

Iran Doubles Down on Strait of Hormuz

Basically, I see the U.S. and Israel showing no signs of letting up their attacks. At the same time, Iran appears to be doubling down on its attacks on global shipping through the Strait of Hormuz and energy infrastructure across neighboring producers in the Gulf.

Traders seem to be reacting more to the videos showing the explosions and fires with three more tankers attacked overnight as Iran effectively brings to a standstill all supplies transiting the Strait. According to the IEA, the war is the “largest supply disruption” in history.

Trump’s Mixed Messages Are Driving Volatility

Adding to the uncertainty over the timing of the end of the war, President Trump delivered more mixed messages, telling the U.S. press that “we won” the war, but also saying “we’ve got to finish the job.” The volatility this week is a direct response to Trump’s remarks, suggesting that traders don’t seem to know whether to believe him or fade him. Earlier in the week, Trump said that the U.S. was ahead of schedule and the war would be over sooner than expected. This triggered a $42.75 correction from a four year high at $119.48. However, over the past two sessions, the WTI market has nearly retraced 50% of the break.

Bulls Eye $100, Bears Counting on Strategic Releases

Volatility is elevated with traders focusing on both sides of the market. On the bullish side, traders of both Brent and WTI are eyeing their respective $100 a barrel price levels. This is the price that could cripple the global economy if prices extend above it for a prolonged period of time. As long as the Strait of Hormuz continues to pose risks to oil tankers, traders are going to eye this price as a key upside target. In the meantime, the bears are hoping that ample supply and the strategic releases eventually drive the bullish speculators to the sidelines. Earlier today, the European Union tried to calm the markets by saying it doesn’t see any immediate concerns regarding the security of its oil supplies as a result of the Iran war, according to Reuters.

The Technical Picture

Technically, April WTI crude oil futures are trending higher but subject to volatile swings. Trader reaction to the retracement zone at $98.11 to $103.15 should set the tone. Either this area will stop the rally and a secondary lower top will form, or speculators will drive right through it to perhaps $120 and beyond.

Key Support Levels on the Downside

On the downside, the retracement zone at $87.18 to $79.55 is the only support separating the market from a pullback to a long-term trend line at $68.33. This is followed by the 50-day moving average at $65.77 and the 200-day moving average at $62.10.

More Information in our Economic Calendar.