Crude oil prices are currently under significant pressure due to new geopolitical developments and ongoing supply issues. Recent actions by both Russia and China indicate a desire to expand oil exports, despite existing U.S. sanctions that are impacting several major oil producers. Concurrently, Canada is nearing approval for a crucial heavy-oil pipeline that will connect Alberta to the British Columbia coast, which could enhance long-term supply capacity.
As of now, crude oil has settled at $58.84, having briefly tested the 100-hour moving average during a recent rebound attempt. Unfortunately, this bounce did not lead to sustained strength, reinforcing a market where supply remains steady or potentially increasing. The overall market sentiment leans bearish unless clear bullish signals emerge.
This month, crude oil has experienced a decline of 5%, with a more significant drop of 18% year-to-date. In the past three months, the prices have fallen by 7.34%. This week alone, prices have dropped 1.76%, and since yesterday’s close, the decrease stands at 0.37%. The structural weakness in the market is evident, particularly with the key support level at $55.96, which has remained intact since October 20, 2023.
While the broader base established between April and September around $55.12 is still holding, persistent selling pressure means that a break below these levels cannot be ruled out. The bearish outlook is confirmed if prices remain below $58.65, while a bullish scenario would only activate if crude climbs above $58.80 with continued follow-through.
For traders, specific price targets have been established based on market behavior. The first partial profit target is set at $58.53, which typically sees early liquidity during a downside extension. Following that, $58.42 aligns with the session low and the second lower volume-weighted average price (VWAP) deviation, making it a strategic point to adjust stops. Further down, $58.28 intersects a notable liquidity pool from previous sessions, while $58.02 sits just above yesterday’s value area low, often attracting responsive buying.
If the price reaches $57.52, it may indicate deteriorating market sentiment. A breach below $57.40 could shift focus toward $55.00 as a medium-term bearish target. Conversely, if prices climb and hold above $58.80, the market could aim for $59.02, a key upside magnet.
For swing traders, a sustained break above $60.10 could open the door to $61.47 as the next medium-term objective. Currently, crude oil has been trading within a range of $57.50 to $60.00 for several days, and without clear technical evidence of a breakout in either direction, traders should anticipate rotational behavior.
The strategy for traders relies heavily on VWAP standard deviations, which expand and contract based on real trading activity. These bands can signal potential turning points, making them crucial for positioning in the current market environment. As always, traders are encouraged to manage their position sizes and risks carefully, as market conditions can change rapidly.
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