- Crude oil shows intraday resilience but remains stuck in a broader bearish structure.
- Supply dynamics, sanctions, and mixed demand keep rallies limited, with the market holding a defined range and favoring short-term selling opportunities.
The light sweet crude oil market, or the US oil market if you will, has shown itself to be somewhat resilient during the trading session on Monday, as we initially pulled back only to turn around and show signs of life again. By doing so, I suspect this is in the middle of trying to find some type of bottom, maybe near the $57.50 level. We'll just have to wait and see, which is basically where we launched from when the Russian sanctions were announced. Remember, the United States did end up launching sanctions against the Russian Federation a couple of weeks back, and that had people buying crude oil rapidly.
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Supply, and Resistance Levels
In anticipation of a lack of supply. After all, we are oversupplied at the moment. So, it does make a certain amount of sense that the oversupply causes depressed pricing. Demand, of course, is a bit of a mixed picture at the moment, and we have to pay close attention to that. But in general, I think you've got a situation where short-term rallies probably continue to get sold into, with the 50-day EMA offering resistance right along with the $60 level. After all, Russian oil will find its way to the market. It has for years. I think there's probably been sanctions on Russian oil to some extent to the other most of the last decade. And that really hasn't changed anything. Because of this, I look at this potential bounce as a potential shorting opportunity, but for short-term trades.
I don't really think the market has a lot of wherewithal to go a great distance at the moment without some type of external push. And right now, I think we're just bumping along the bottom, as it were, without any real reason to strengthen quite drastically. The floor in the market at the moment is $55. The ceiling, the absolute ceiling at this point, is $62. If we were to break out of that range, obviously, things would change, but that doesn't look very likely at the moment. Fading short-term rallies will continue to be the way I trade this market.
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