The light sweet crude oil market initially gapped higher to test the top of the trading range from the previous session early on Thursday, but it has fallen since then.
Light Sweet Crude Oil
The light sweet crude oil market initially gapped higher to test the top of the trading range from the previous session early on Thursday, but it has fallen since then. I think what we're seeing here is a market that is likely to try to determine the overall summer range. After all, it's very typical that crude oil has a summer range every year, and once we fell to the market gap from the announcement of the war between the United States and Iran, that made a good potential floor for the market on a range that could continue throughout the summer.
The question at this point is whether or not we know where the top is, and I don't think we do yet, but the 200-day EMA is very likely to be an area that a lot of people will watch as well. The 200-day EMA is a bit like a ceiling, at least from a technical analysis standpoint. As long as we stay underneath there, I think that makes this a very obviously range-bound market, and the behavior on Thursday suggests that we are not ready to just spike higher.
Geopolitical Premium Fades as Summer Range Establishes
I think the whole fear of war is starting to be priced out of the market. So with that being said, I'm looking at $67 as the floor and, at least for the time being, $78 or so as the top. We're basically in the middle. Let's see how this plays out. You could probably play it in both directions.
I do prefer to buy dips in general, though, simply because most of the time there's at least underlying demand this time of year, not necessarily enough to spike the markets, but enough that it provides plenty of support over time. So, back and forth with maybe a little bit more upward bias than down is my expectation.
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