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Lot of Noise in a Well-Defined Range


In a broader sense, it appears that crude oil markets are settling into a typical “summer range.”

  • The West Texas Intermediate Crude Oil (WTI) market displayed a back-and-forth movement during Friday’s trading session, nearing the upper boundary of its short-term range.
  • A notable hurdle lies ahead with the 50-Day Exponential Moving Average hovering around the $72.50 mark, posing significant resistance.
  • A successful breach beyond this level could potentially lead to an upward push toward the $75 threshold.

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Support lies beneath at the $67.50 level, serving as both the lower boundary of the current range and the overall market floor. Despite a few days of mildly positive performance, momentum appears to be waning. Such a scenario aligns with the prevailing concerns regarding global demand for oil. Additionally, the ongoing production cuts implemented by OPEC add further complexity and contribute to the market’s turbulence.

The Brent Crude Oil market experienced a similar oscillation during Friday’s trading session, approaching the 50-Day EMA. Brent, like WTI, encounters volatility due to uncertain global demand and tightened global supply. This will continue to be the case going forward from what I can see. However, as we go further into the year, we may be able to see more clarity in this market.

Around the $77 mark, the declining 50-Day EMA presents a substantial resistance level, followed by the significant barrier at $80. On the downside, the $71.50 level holds significant support, perpetuating the market’s turbulent behavior. Given the multitude of factors at play, this market is expected to remain choppy, exhibiting movements in various directions. Volatility will persist, characterizing the crude oil landscape.

In a broader sense, it appears that crude oil markets are settling into a typical “summer range.” This consolidation phase has been in effect since mid-May, defining a well-defined range. Despite arguments suggesting that current pricing does not accurately reflect supply conditions, there are no indications that this situation will change in the near future. The market seems reluctant to commit substantial investments in either direction, favoring a range-bound approach.

At the end of the day, both the WTI and Brent crude oil markets are currently undergoing consolidation and facing uncertainty. Resistance levels are looming overhead, while support levels remain intact. Volatility is anticipated to persist, resulting from global demand concerns and production cuts enforced by OPEC. For the time being, a range-bound system appears to be the most suitable strategy for navigating the crude oil markets.

Brent Crude Oil

WTI Crude Oil

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