Crude Oil Back in the Range Above $70 As Banking Turmoil Fades

Posted Tuesday, March 28, 2023 by
Skerdian Meta • 2 min read

Oil experienced a significant drop in value during the recent banking turmoil, much worse than other financial instruments and even in comparison to economically-sensitive commodities such as copper. The initial wave of selling was driven by macroeconomic concerns and technical factors, as oil broke through the main support zone above $70. Additionally, there was a buildup of long positions above that level in Oil leading up to the drop, which added further to the sell-off once the support was broken, as speculators were flushed out.

However, there may be some good news for Oil bulls in the long term. The drop in prices will make Oil companies more capital-restrained, which could lead to a tighter market in the second half of the year if the global economy doesn’t fall into recession and banking issues fade. Russia has also begun to curb the Oil output and the US is wrapping up SPR sales, while the Chinese market is starting to recover from the prolonged coronavirus shutdown. Besides that, Iraq halted some of its crude Oil exports from the Kurdistan region, which was another factor for the bullish momentum yesterday.

US Oil Daily Chart – The Price Is Back Up Above $70

MAs are still pushing the highs lower in crude Oil

There is a sense that commodity bulls are waiting for an opportunity to buy, and a bounce in Oil prices of $3 could be that opportunity. Yesterday the price closed near $73 which puts Oil back into its previous range and potentially set up a technical rebound similar to what Bitcoin experienced over the past month.

Although the main trend is still bearish as the daily chart above shows, with moving averages acting as resistance during retraces higher and pushing the highs lower. So, WTI Oil has to push above the 100 SMA (green) for the trend to turn bullish, otherwise we might see a return below the support again.

US WTI Crude Oil Live Chart

WTI
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