WTI Recovers From Early Setback as Strait of Hormuz Remains the Focus
April WTI crude oil futures finished higher on Friday after recovering from an early session setback. The Strait of Hormuz was the primary focus for traders and also the source of volatility. Overnight, prices were lower because of an erroneous report that said an Indian-flagged oil tanker had made it through the Strait without being attacked by Iran. This surprised traders because it has been shut since the war between the U.S. and Iran began on February 28. Prices turned around, however, after traders found out the tanker did not pass through the Strait.
Russian Oil and SPR Releases Fail to Impress Traders
Supply issues remained at the forefront with the U.S. doing whatever it can to keep crude oil and gasoline prices lower. One such move was the issuance of a 30-day license for countries to buy Russian oil and petroleum products adrift at sea. Reuters reported that Treasury Secretary Scott Bessent said the move was necessary to stabilize global energy markets disrupted by the war. Others see it as politically motivated since it is well-known that elevated gasoline prices can sway voters.
But like the release of oil from the International Energy Agency (IEA) and U.S. strategic reserves (SPRs), traders seemed to be unfazed by the move. Russia’s presidential envoy Kiril Dmitriev, said the news will have an impact on about 100 million barrels of Russian crude, or about a day’s worth of global output. In my opinion, the news is the release of the oil on ships, but it’s not “extra” supply. It was already sold, just not delivered. Nonetheless, it could reduce some of the shortage pressures in the market.
Paper Bearish but Not Strong Enough to Offset War Damage Fears
While the SPR news and the Russian release is potentially bearish on paper, the moves are not strong enough to reduce the even bigger fears of severe damage to oil infrastructure, which would have a longer lasting impact on supply.
Looking ahead, the crude oil picture is beginning to look bleak with no end of the fighting in sight. The two key factors underpinning prices are war damage to Middle East infrastructure and disruptions in the Strait of Hormuz.
Brent Oil Price Forecast
Every new Brent Oil analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Brent Oil forecasts$98.71 Sets the Tone on Monday
Technically, April WTI crude oil finished Friday’s session on the strong side of a key 50% level at $98.11. Trader reaction to this level will set the tone on Monday.
A sustained move over $98.11 will indicate the presence of buyers. The first upside target is a 61.8% level at $103.15. This price could be the trigger point for an acceleration to the upside with no resistance until $119.48 to $130.50.
Downside Risk Back to $76.73
Looking at the downside potential, a sustained move under $98.11 will indicate the presence of sellers. If this creates enough momentum, prices could collapse into the $87.18 to $79.55 retracement zone. This will expose the main bottom at $76.73 and a trend line at $69.45.
More Information in our Economic Calendar.
