Oil Prices Stabilize Below $80 and the 200 Daily SMA
In June, crude oil prices experienced a bullish trend, but this shifted in July as prices turned bearish and dropped below $80 where it is consolidating. The significant drop below the 200-day SMA, which was previously a resistance level at $80, suggests that this may establish a new trading range lower for crude oil.
On Friday, crude oil prices declined sharply, dropping more than 3%. This drop was driven by concerns about the global economy, particularly the slowdown in China’s economic growth and uncertainties surrounding Donald Trump’s drilling policies, which are expected to keep supply strong and demand weak.
WTI Chart Daily – Holding Below the 200 SMA Despite Lower Inventories
Trump’s position strengthened after a failed assassination attempt, however the political landscape remains uncertain and very polarized. This has implications for the oil market, as a potential Trump victory could lead to a resolution of the conflict in Ukraine, potentially pushing oil prices down further. Given these factors, it seems likely that the oil market will remain range-bound, without significant movements in either direction for the time being.
This cautious outlook reflects ongoing economic and political uncertainties, suggesting that traders may remain hesitant to take strong positions until there is more clarity. Late yesterday, the latest EIA weekly crude oil inventory data was released, revealing a notable drawdown across various categories, including crude oil, gasoline, distillates, and Cushing stocks:
Weekly EIA Crude Oil Inventory
US WTI Crude Oil Live Chart
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