- Crude oil rallied briefly on Wednesday but remains pressured by weak demand and persistent oversupply.
- With resistance near $62 and support around $60, I see rallies as selling opportunities amid ineffective sanctions and ongoing global production.
Light sweet crude oil initially did rally a bit during the trading session on Wednesday, but it also continues to see a lot of overhang as market participants have been looking at this through the prism of a market that, although there are some external factors to take into account such as the United States levying sanctions on Russia, the reality is that the demand out there just isn't strong enough to really drive price higher.
Top Forex Brokers
From a technical analysis standpoint, we are sitting just below the 50-day EMA and the $62 level. The $60 level underneath current levels should offer some support, as not only is it a large, round, psychologically significant figure, but it is also the beginning of the gap that formed when the United States did, in fact, levy sanctions against Russia.
Sanctions, in the End, Won’t Matter
The biggest problem with those sanctions is that they won't be effective, just like every other set of sanctions has not been effective against Russian supply. Ultimately, the Russians will find a way to put the oil back into the market, and therefore, the oversupply of crude oil coming out of the United States, OPEC, and Russia will continue to be a major problem for crude oil prices.
If we break down from this level, it's likely that we could go looking at the $58 level. Short-term rallies should continue to face a lot of overhang around the $62 level, where the 50-day EMA also currently resides. All things being equal, this is a market that I think you continue to fade rallies every time they show up and show the slightest hint of exhaustion.
Ready to trade Oil daily analysis and predictions? Here are the best Oil trading brokers to choose from.