Talks Pressure Crude Oil at the Start of the Week
U.S. benchmark WTI crude oil futures and international benchmark Brent crude oil futures opened the new week lower on hopes of progress in talks on ending the U.S.-Iran War. According to Reuters, talks between Iranian and Qatari officials over the weekend are raising hopes that Middle East supply bottlenecks could soon loosen.
Last week started the same way, with downward pressure driven by changing geopolitical tensions. It may have been enough to ease tensions for a few days, but without anything in writing, buyers returned and the markets hit new contract highs.
Supply Risks Keep the War Premium Intact
The ongoing regional conflicts, including attacks on Saudi production facilities and tankers, are keeping the war premium intact by injecting a level of uncertainty and nervousness into the market.
The current data shows that since the war began at the end of February, the world has depleted nearly 1 billion oil barrels from inventories, with disruptions to shipping traffic through the Strait of Hormuz a major factor.
The new talks seem to be easing these concerns for some, but Goldman Sachs is saying that prices could still rise. Its analysts said Brent could jump to $140 in 2027 if Gulf oil output “stays 3.5 million barrels per day below its 2025 average.”
Traders Need Evidence That Risks Are Easing
At the start of the new week, I don’t have much confidence in the current talks dampening any of the major triggers underpinning prices. These include shipping attacks and oil infrastructure damage. The war premium is likely to remain intact unless there is tangible evidence that the talks are reducing supply risks. Further attacks or infrastructure damage could keep prices elevated.
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 forecastsWeekly December WTI Crude Oil Futures Technical Analysis
December WTI crude oil futures are lower early Monday. The main trend is up according to the weekly swing chart. Last week, the market formed a minor closing price reversal top. That is, it closed lower for the week after hitting a new multi-month high, but it did not close below the mid-point for the week or below the opening. This suggests the selling pressure was more about resistance and the lack of buying at the current lofty levels rather than outright liquidation.
A trade through $104.99 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through $86.00.
On the upside, additional resistance comes in at $106.75 to $107.77, followed by $111.03. On the downside, the first support zone is $95.50 to $93.25. The second support zone is $85.99 to $81.50.
The 52-week moving average at $74.58 is both a major trend indicator and potential support.
The price action suggests that crude oil has become a news-driven market. Currently, the December WTI crude oil futures market is asking traders whether they want to buy strength over $104.99 and play for an upside breakout, or if they want to play for value at the first support area at $95.50 to $93.25.
Weekly January Brent Crude Oil Futures Technical Analysis
January Brent crude oil futures are edging lower early Monday. The main trend is up according to the weekly swing chart. A trade through $114.29 will reaffirm the uptrend. The main trend will change to down on a trade through $74.97.
Unlike the WTI futures contract, Brent crude did not produce a closing price reversal top last week.
The minor trend is also up. A trade through $81.33 will change the minor trend to down.
Potential upside levels include historical tops at $117.45, $119.50 and $126.41.
Due to the prolonged move up in terms of price and time, there haven’t been many swing moves on the weekly chart so the retracement zones are well below the current price levels. The nearest support zone levels come in at $97.81, $94.63 and $93.92.
The major support and long-term trend indicator is the 52-week moving average at $79.49.
What to Watch
December WTI Crude Oil
With the trend up on the main swing chart and the market holding well above the 52-week moving average, my bias remains to the upside, but I recognize I’m going to need new buyers willing to pay up to drive the market through $104.99 and beyond. However, I also recognize that the market is vulnerable to a pullback into a potential support zone at $95.50 to $93.25 before buyers return.
The headlines are likely to determine how traders are going to play the chart pattern.
January Brent Crude Oil
The bullish 52-week moving average and the uptrending weekly swing chart are both helping me to maintain my upside bias. A trade through $114.29 will reaffirm the uptrend, but it could immediately run into resistance at $117.45 to $119.50. The latter will then become a potential trigger point for an acceleration to the upside.
There is no minor swing-chart support until $81.33, nor is there main swing-chart support until $74.97. However, there is a string of retracement zone levels from $97.81 to $80.24. These levels indicate vulnerability and potential support.
If you’d like to know more about how to trade crude oil, please visit our educational area.