Crude oil slipped back a touch in early trade this morning. But that only blew off some froth following its recent run-up. Front-month WTI came close to $63 per barrel to mark a four-month high. It is currently testing some mild resistance from back in October.
It does feel as if oil is benefiting from a big turnaround in sentiment. It has certainly broken out of the downtrend which had built since last summer. And it looks as if it could be quite comfortable trading above $60 per barrel.
Yet it was only three weeks ago that it threatened to break below $55 and take out the cycle lows from April last year. But taking a longer-term view suggests that there are still technical hurdles to overcome for further upside.
Crude oil is some way from breaking out above the longer-term downward trend, which has been building from the highs which followed Russia’s invasion of Ukraine in February 2022.
And while the daily MACD is signalling that momentum is building to the upside, recent history warns traders against getting too comfortable holding long positions in crude oil.
Source: TN Trader
This recent push higher was driven by supply concerns after a severe winter storm across the east of the US, which knocked out roughly 15% of national output and halted crude and LNG exports from Gulf Coast ports. Traders now await the latest US EIA crude inventory report, with a larger-than-expected draw likely to reinforce the bullish tone, while a surprise build could cap further gains.
