Crude’s Spectacular Gains Evaporate
It was just over a week ago that crude prices soared into double-digits. Crude jumped 12.8% and pushed above the 63-line. Fast forward to today, and crude has coughed up most of these gains and the $60 level is once again comfortable as a ceiling. This latest round of volatility should serve as a firm reminder of a fundamental trading rule – what goes up in a flash can quickly come down. After crude rocketed last week, there were plenty of voices predicting that the days of crude at the lofty level of $100 were close by. I would consider the $70 level a more realistic ceiling for crude in the near future – this line has not been breached since October 2018. At the same time, the attack on a Saudi refinery, which precipitated the huge swing in oil prices, is a reminder that global oil production is vulnerable to the conflict in the Persian Gulf, and further negative developments in that region could once again trigger a sharp rise in oil prices.
