Crude Oil - Back To Normal?

After closing another week on the global oil markets, we took some time to reflect upon the past week. We recognized that our two benchmark oils did not completely skyrocket on late Friday evening, pushing through our resistance zones. Accordingly, Brent and WTI started much more relaxed into the weekend and were rather relaxed to the start of the current week. Although this market is a relatively dynamic one, compared to other markets, the movements were predominantly bearish, which is a good sign! For months now, the oil prices are continuously increasing, which is more than normal, as we are facing the theoretical end of the Corona Pandemic, which spurs hopes that we might return to normality. Therefore, the collapsed demand is recovering, as expectations rise that the normal economic life is going to continue relatively soon. In addition to that, the global oil reserves are steadily depleting. This means that in the long-run, there is only one way: UP! However, a market never develops linearly. Even in such bullish set-ups, bearish movements are necessary to balance the development and prevent the market from overheating, as is the case with crude oils. Currently, we are expecting such a correction.

At the beginning of last week, the British Brent oil was below the support line of $67.68. Would it have stayed below this mark, we would have had an assurance that the peak at $71.36 marked the end of the wave 3 in green, but it did not stay there for long. With the start of the new week, the price moved down again and crossed the support line at $67.68 a second time. We expect the Brent price to consolidate itself below that mark, as this is an important step that the course develops following our primary expectation. Here, we see a further declining price, which should ultimately fall under $62.36 as well. Even prices below $58 are thinkable in such a scenario before making a big turnaround to tackle the $80 mark.

We expect the WTI to follow suit. The North American crude oil only slightly crossed its first support at $63.81, did not come back as strong as Brent and did not yet manage to fall under $63.81 a second time, which we, however, believe will happen. Nonetheless, we primarily expect the price to drop and also cross the second support at $57.27 in the way down. Our expected target for the following upward movement for WTI is also above $80.

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