Crude oil weakens on Friday as both WTI and Brent face heavy overhead resistance, with supply concerns and ineffective sanctions capping rallies. Price action suggests a developing range, making short-term exhaustion points attractive for potential fading.
Crude Oil Technical Analysis
The light sweet crude oil market has fallen significantly during the early hours on Friday as we have broken below the $58 level, although we are trying to push back just a bit. Ultimately, the $60 level is a bit of a barrier with the 50-day EMA sitting just above there. All things being equal, this is a market that, if we rally from here, I will be looking for signs of exhaustion that I can start shorting. I do not necessarily think that the market takes off to the upside. I do not necessarily think that the market falls apart either. I just think there is quite a bit of overhang for multiple reasons.
Brent Technical Analysis
Brent markets have fallen as well, although they are recovering a little bit better than the light sweet crude oil market is. Nonetheless, Brent still faces a major barrier in the form of $65 above, where the 50-day EMA resides, and of course, the previous support and resistance barrier lives. This is the same thing as the light sweet crude oil market. Quite frankly, there is just too much supply out there to keep pricing elevated.
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Despite the fact that there were new sanctions on the Russians, nobody seems to care because Russian oil has been sanctioned for as long as I can remember, truthfully. So at this point in time, it is just going to be another game of sanctioning, but Europeans are still buying Russian oil, et cetera.
With that being said, I think we are trying to form a range that we will be comfortable in. We could get a little bit of a bounce in this area, but I would anticipate that the $65 level offers quite a bit of resistance. So I am more inclined to fade short-term rallies that show signs of exhaustion.
Credit: FXEmpire.com
