- During Friday's trading session, the West Texas Intermediate (WTI) and Brent crude oil markets experienced limited upward movement, as they remained broke the 50-Day Exponential Moving Average.
- This indicator has previously acted as a significant resistance level, resembling a downtrend line.
- Both crude oil benchmarks are currently trapped in a consolidation phase, prompting cautious market sentiment.
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US Crude Oil Market
In the WTI crude oil market, the $70 level has garnered interest, as it provided support during Thursday's trading session. However, if the price breaks below this level, it could signal a potential move towards the $67.50 mark. A breach of that level would open up the possibility of a further decline towards $65, which aligns with the lower boundary of the overall consolidation range. Conversely, a breakout above the $75 level could trigger a larger "buy-and-hold" scenario. Presently, the market appears to be confined within what is commonly referred to as the "summer range."
UK Crude Oil Market
Brent crude oil also made attempts to move higher during Friday's session clearing the 50-Day EMA. A breakout above this level would likely drive prices towards the significant $80 level. This level holds both psychological and technical importance, representing the upper boundary of the consolidation area. Conversely, if the price retreats below $75, it may prompt a potential decline towards $71.50. A breach of that level would increase the likelihood of testing the crucial $70 support level, which acts as the bottom of the range.
Crude oil markets currently face the challenge of assessing future demand levels amidst ongoing production cuts by OPEC. The cautious sentiment is driven by uncertainties surrounding global economic conditions and the pace of post-pandemic recovery. Consequently, the WTI and Brent crude oil benchmarks remain locked within their respective consolidation ranges, as market participants await a breakout for clearer direction.
In conclusion, the WTI and Brent crude oil markets showed bullish movement on Friday, breaking above the 50-Day EMA. The consolidation phase continues, reflecting cautious market sentiment driven by concerns over future demand and ongoing OPEC production cuts. The $70 level in WTI and $75 level in Brent remain crucial points to monitor. A breakout above these levels would signal potential upward momentum, while a breakdown below would increase the likelihood of further declines. The crude oil markets face challenges in assessing demand dynamics amidst global economic uncertainties. As a result, the benchmarks remain range-bound, awaiting a breakout for clearer market direction.
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