Author: Amar – Technical Analyst
Oil prices fell early in Sunday’s session, continuing last week’s decline as a US official said Russia was showing signs it may be open to substantive negotiations over Ukraine. Investors were concerned about a tighter oil market following Russia’s move. Prices fell last week as traders assessed possible improvements in the supply outlook disrupted by the Ukraine crisis. Russia is showing signs it may be ready for substantive negotiations on Ukraine, even as Moscow intends to “destroy” its neighbor. The talks between Russia and Ukraine will take place later somewhere today.
After pulling back from a fresh 14-year high, WTI crude oil prices remain under pressure around $103/barrel during the early Asian session this morning. The US Crude Oil posted a weekly drop of 5.7% from peak at $130/barrel on March 7th. Both contracts last touched these price peaks in 2008. Although the move limits black gold’s immediate upside potential from around $105/barrel at the time of writing, an upward sloping support line from Dec 20, 2021 near $95/barrel becomes the key level to look at during the price’s greatest weakness should watch.
Crude oil will remain a volatile asset for the foreseeable future. However, in my opinion, oil prices remain vulnerable to upside moves. Prices drastically declined on Wednesday on the back of comments of supply increases that were later invalidate. Prices dropped and we are yet to see a recovery back to the elevated prices prior to the 13% decline. In the absence of additional confirmed oil supply in the market and the fact that prices have not recovered to Wednesday’s levels, this leaves the door open for higher crude prices this week.