Crude Oil Forecast: Resilience Amid Geopolitical Concerns

At the end of the day, the crude oil markets exhibited resilience, bouncing back after filling the recent gap. 

• The crude oil market demonstrated resilience during Thursday’s session, rebounding after filling the gap from earlier in the week.
• This rebound suggests that the overall uptrend is set to resume, with market participants increasingly focusing on supply and demand dynamics.
• While concerns persist regarding the potential expansion of the conflict in the Gaza Strip, the tight supply situation has underpinned the market, driving prices higher.

As crude oil prices break above the 50-day Exponential Moving Average, attention turns to the $85 level as a possible target. A breach above the $87.50 mark could pave the way for a move towards the psychologically significant $90 level. This would be a minor move in what I believe is a bigger market move in the longer term.

Beneath the current levels, the 200-day EMA provides crucial support and will play a determining role in shaping the market’s trend. In the short term, it is reasonable to anticipate some strength as market participants seek opportunities to capitalize on the bounce. This has been the pattern so far, so we should see some interest.

In the Brent market, a similar rally occurred as the gap was tested and the focus shifted towards breaking above the 50-Day EMA. Resistance at the $89 level could prove challenging, but if successfully breached, it may lead to a test of $90, with a potential further rally towards the $95 level. The $95 level has previously acted as a substantial resistance zone, making it a notable target for traders.

Despite the inherent choppiness and volatility in this market, the overall sentiment leans towards bullishness. Shorting the market is not a favored strategy, given the prevailing conditions. While oversold conditions may contribute to increased noise in the market, the broader outlook suggests a positive trajectory in crude, as we continue to see very tight physical supply. The real world has a lack of supply, but the paper market can be quite different.

At the end of the day, the crude oil markets exhibited resilience, bouncing back after filling the recent gap. Supply and demand dynamics are gaining prominence, and geopolitical concerns persist. The potential targets for both WTI and Brent markets are clearly defined, with the 50-day EMA acting as a pivotal indicator. While volatility remains a factor, the prevailing sentiment remains bullish, making long positions a more favorable approach.

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