Technically, the main trend is down according to the daily swing chart, but momentum is trending higher. A trade through $58.88 will change the main trend to up. Taking out $56.65 will shift momentum to the downside.
The market is currently straddling a 50% level at $57.60. Reaction to this indicator will set the tone into the close.
Bullish Oil Scenario: Path to $58.77 Resistance
A sustained move over $57.60 will indicate the presence of intraday buyers. Strengthening upside pressure could drive light crude oil futures into another 50% level at $58.62 and the 50-day moving average at $58.77, which is actually the long-term trend indicator.
Bearish Oil Scenario: Risk of Drop to $54.84
The failure to overcome $57.60 will signal the presence of sellers. This could drive the market into the minor retracement zone at $56.86 to $56.38. If counter-trend buyers don’t show up to support the market in this area, prices could collapse under $56.38, putting $55.61 and $54.84 back on the radar.
What’s Driving Oil Prices? Oversupply vs. Geopolitical Risk
Fundamentally, gains are being capped by oversupply worries, but the market is getting a little support from geopolitical risks tied to the ongoing war between Russia and Ukraine. The seizure of Venezuelan tankers by the U.S. is raising red flags over the country’s exports.
Russia-Ukraine War Threatens Global Oil Supply
Despite the efforts of President Trump, the war between Russia and Ukraine appears to be escalating, with Kyiv intensifying attacks against Russian energy infrastructure in recent months. The goal is to hurt Russia’s means of financing the war. Ukraine is hoping these strikes, combined with sanctions, could bring Russia to the negotiating table.
