After the Storm, What’s Next for Crude?
After the sharp volatility which we saw last week, including double-digit gains, crude prices have settled down and are currently at the $58 level. Crude easily punched past the symbolic $60 level last week, with some analysts predicting that crude was on its way to the lofty $100 mark. It is true that the attack on a Saudi oil terminal triggered a spike in prices and highlighted the vulnerability of oil supplies. Still, traders should keep in mind that the $100 line has held firm since June 14, which indicates that it is a resilient resistance line. I do not expect crude to climb anywhere close to $100, barring a major conflict in the Persian Gulf which significantly reduces oil production and supply. At the same time, last week’s volatility is something traders should keep in mind, and further negative developments in the Persian Gulf could trigger a sharp rise in oil prices. 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.
