The strong bull run in crude Oil has ended and it is now showing uncertainty, as the global economy slows down and heads into a prossible recession. US WTI Oil reversed from above $123 last month and headed toward $100, but sellers are finding it difficult to push below that level, as the 100 SMA (green) holds a support on the dily chart last week.

Oil prices gained more than 2% on Friday as supply outages in Libya and expected shutdowns in Norway outweighed expectations that an economic slowdown could dent demand. Brent crude futures settled at $111.63/barrel, rising $2.60. West Texas Intermediate crude (WTI) settled at $108.43/barrel, gaining $2.67, or 2.5%.

US WTI Oil Daily Chart – Crude Oil Bouncing Between the 50 and 100 SMAs

The 100 SMA holding as support for crude Oil

Notwithstanding supply disruptions from various oil-producing countries, the global crude oil futures traded lower early Monday as fears of recession continued to haunt the global markets. Most analysts are thinking that the US FED’s decision to hike interest rates aggressively to control inflation could lead to a recession in that country.

However, the supply-side constraints stopped the crude oil futures declining further. Some of the oil producers such as Libya and Norway are facing production-related issues. In addition, the ban on the Russian crude oil imports by some western nations also impacted the supply situation in the already tight market. These factors helped easing of the weakness in the crude oil market.

Saish Sandeep Sawant Dessai, Research Associate, Base Metals, Angel One Ltd, said the rising dollar, which makes oil more expensive for buyers using other currencies, was a reason that kept prices under pressure. In his outlook for the day, he said: “Prices are expected to remain elevated as the perceived tightness in the oil supply is lending resilience to oil prices.”

US WTI Crude Oil Live Chart