Crude Oil Forecast: Continues to Do Very Little as Traders Wait for Momentum

Advertisement

Take advantage of today's Crude Oil movements

Trade Now

WTI Crude Oil (US Oil)

During Wednesday's trading session, the West Texas Intermediate Crude Oil market initially experienced a slight surge. However, it soon lost those gains near the 50-Day EMA due to the absence of any real indication of momentum. Consequently, lackluster performance is expected to continue, making it challenging to become too enthusiastic unless you're a short-term trader.

It appears that the $72.50 and $82.50 levels will mark the boundaries of the overall consolidation. It's improbable that we'll break out of this region soon. Notably, concerns are arising over whether there will be enough demand as central banks worldwide tighten monetary policies. If this is the case, oil will probably remain within this range. However, breaking above the 200-Day EMA may trigger the next "FOMO trade." In that situation, we could have a big “melt”, which is what some people are expecting in the summer. Having said that, there are a lot of economic headwinds out there that may keep that from happening. As far as a breakdown is concerned, I’d be surprised if we broke down below the $70 level without some type of major economic event.

Brent (UK Oil)

During Wednesday's trading session, the Brent markets attempted to rally, but they encountered resistance from the 50-Day EMA. Consequently, it's expected that we'll remain within this range, with support at the $77.50 level below and resistance at the $90 level above. The futures contract's 200-Day EMA is currently at the $89.28 level, and breaking above it would trigger significant buying. However, it's unlikely to happen anytime soon, making this market interesting for range-bound traders.

Technical analysis suggests that using tools like the Stochastic Oscillator may be beneficial since there's no clear momentum in either direction as traders try to interpret global economic conditions. These conditions indicate a tight crude oil supply, but also a significant lack of demand. Eventually, there will be a substantial move, likely around $10 once we break out of this area. However, it's not anticipated to happen soon.

Keep in mind that Brent is much more susceptible to emerging-market noise, and even though the Chinese have recently reopened, it does not seem to be enough to move this market. Because of this, I think this will remain a very back-and-forth type of situation in the foreseeable future.