- During Thursday's session, the West Texas Intermediate (WTI) and Brent crude oil markets experienced significant declines, primarily due to resistance at the 50-Day Exponential Moving Average (EMA).
- Traders are closely monitoring the global economy, which appears to be slowing down, influencing their outlook on oil.
- As summer typically brings range-bound trading conditions, short-term back-and-forth movements are expected. Traders who employ range-bound systems may find this market suitable for their strategies.
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The WTI crude oil market faced a sharp decline at the open on Thursday, reflecting ongoing resistance at the 50-Day EMA. Traders are viewing the market with caution in light of global economic uncertainties. Support is expected near the $67.50 level, indicating potential range-bound trading. This suggests that short-term fluctuations will likely dominate, providing opportunities for traders who thrive in such conditions.
Similarly, the Brent crude oil market declined during Thursday's session, with the 50-Day EMA again serving as a barrier. Traders consider this level a short-term top while eyeing the significant support near the $71.50 level, potentially extending to $70. Consequently, Brent crude oil may also exhibit range-bound trading characteristics throughout the summer as market participants seek stability during the "driving season" in the United States.
Traders Should Focus on Short-term Trades
Despite OPEC's ongoing efforts to cut production, the crude oil markets have not responded positively. This lack of market enthusiasm concerning production cuts raises concerns about global economic growth. Crude oil prices are often considered an indicator of economic health. The market's current state suggests a period of indecision as traders evaluate the next steps. Consequently, it is advisable to approach this market cautiously, refraining from significant positions. Instead, short-term trading strategies with reasonable sizes are more appropriate. Should a breakout from the range occur, the WTI and Brent crude oil markets could experience substantial price movements, potentially amounting to a $10 shift.
At the end of the day, the WTI and Brent crude oil markets faced resistance at the 50-Day EMA, resulting in significant declines. Traders are carefully monitoring the global economy, which shows signs of a slowdown, impacting their outlook on oil. Range-bound trading conditions are expected throughout the summer, offering short-term back-and-forth trading strategy opportunities. OPEC's production cuts have not yielded the desired market response, reflecting concerns about the global economic climate. Given the current circumstances, it is prudent to exercise caution and refrain from large positions. Traders should focus on short-term trades while remaining attentive to potential range breakouts that could trigger significant price movements of as much as $10.
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