U.S. benchmark WTI and international-benchmark Brent crude oil futures are edging lower at the start of the new week after touching multi-month highs the week before. The catalysts are mixed at the start of the week. Bullish traders are focusing on persistent attacks on major producer Saudi Arabia. Bearish traders are hoping for an easing of hostilities between the United States and Iran.
At 04:44 GMT, December WTI crude oil futures are trading $101.00, down $2.44 or -2.36% and December Brent crude oil futures are trading $114.53, down $2.85 or -2.43%.
According to reports, Qatari mediators traveled to Tehran in an effort to de-escalate regional tensions. But the price action suggests the move may prove to be only temporary. Market chatter has pegged the resumption of attacks on Iran by the United States as after the November midterm elections. This suggests that volatility is expected to remain elevated. This means risks will still be skewed to the upside for at least one or two more weeks.
In my opinion, bullish short-term traders are focused on renewed military activity in the region and potential supply disruptions. Longer-term traders are already looking at the possibility that oil supply won’t return to pre-war levels until 2027.
Weekly December WTI Crude Oil Futures Technical Analysis
December WTI crude oil futures finished sharply higher last week after posting a new contract high. The main trend is up according to the weekly swing chart. A trade through $103.92 will signal a resumption of the uptrend. The main trend will change to down on a break under the swing bottom at $86.00.
The temporary main range is $86.00 to $103.92. Its retracement zone at $94.96 to $92.85 is potential support.
Last week, the market crossed a long-term resistance level at $101.37, but continues to straddle it early Monday. We’re going to watch trader reaction to this level because it could set the tone for the week.
Last week’s close at $103.44 is another level to watch closely, but only if traders take out last week’s high at $103.92 first. In this case, we’re going to watch for the formation of a potentially bearish closing price reversal top.
Near-term targets over $103.92 include $106.75, $107.77 and $111.03.
If you’ve studied the long-term charts in December WTI crude oil futures, you’ll notice that the market seldom forms a top, but rather it spikes a top. This is one factor we’ll be watching for this week too.
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See all Brent Oil forecastsWeekly December Brent Crude Oil Futures Technical Analysis
The main trend is up according to the weekly swing chart. Taking out $117.45 will signal a resumption of the uptrend. The main bottom is $75.77. A trade through this level will change the main trend to down.
The minor trend is also up. A trade through $93.68 will change the minor trend to down. The minor range is $93.68 to $117.45. Its retracement zone at $105.65 to $102.76 is the nearest support zone. With the main trend up, buyers could reemerge on a pullback into this area.
Although the market is trading on the strong side of a previous top at $113.14, this price could still act like a pivot as traders assess the next move. This means we could see a breakout over $117.45 with $123.00 the next objective or a breakdown to $105.65 to $102.76.
Weekly January Brent Crude Oil Futures Technical Analysis
Traders roll over from December Brent to January Brent by the end of the week. Like the other crude oil contracts, the January main trend is up. The contract high is $112.45. The next target zone is $114.25 to $115.80. The market starts to open up to the upside over $115.80 with $119.50 the next target.
Prices expand further over $119.50 with potential targets coming in at $123.21, $128.40 and the record high from 2008 at $147.50.
I’m not worried about the upside potential. My concerns are about downside exposure since the nearest support zone is $91.71 to $86.81 and the 52-week moving average is $78.54.
Due to the prolonged move up in terms of price and time, traders should watch for a potentially bearish closing price reversal top this week on a close under $112.07. This level will become important only after buyers take out $112.45.
What to Watch
Weekly December WTI Crude Oil Futures
My bias is to the upside with the swing chart supporting my outlook. The long-term uptrend supported by the 52-week moving average at $73.76 is also exerting upside pressure. A potential closing price reversal top later in the week will weaken my outlook.
Weekly December Brent Crude Oil Futures
My bias is to the upside because of the strong trend on the main swing chart and the market’s relative position to the 52-week moving average at $79.90. The inability to hold $113.14 will be the first sign of weakness, while a failure to hold $102.76 will weaken my outlook.
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