Yesterday morning, front-month WTI was closing in on $65 per barrel, its highest level in close to three weeks. But it pulled back sharply from here and briefly dropped below $61.50 by the early afternoon.
Prices have steadied since then, and it’s fair to say that crude has, at current levels, managed to put a lot of distance from the low hit a fortnight ago, just under $55. The daily MACD has turned up from the moderately oversold levels seen back then.
Source: TradingView
This would suggest that momentum is currently biased towards the upside, although that doesn’t mean there won’t be big moves in both directions, in a similar way to precious metals.
Crude oil is currently just as much subject to trade talk as anything else. And there’s little doubt that traders have already priced in the falling demand growth outlook given the negative effect that tariffs will have on global economic activity.
Despite this, there are many other factors that influence the oil price, including supply. As far as the latter is concerned, there is speculation that OPEC+ may add to the production increases planned for next month, by accelerating the rate of output into June as well.
This comes on top of the bigger-than-expected rise in May which was announced just after President Trump’s reciprocal tariffs were unleashed at the beginning of this month.
So, there are good reasons why sellers continue to keep oil prices in a downtrend. But the market is overdue a sustained rally. The question is whether that can start from current levels, or if prices have to go lower first.
