Oil Selling finds support as reality of tighter Oil Market prevails

Oil (WTI, Brent Crude) Analysis

  • WTI oil finds support in the area of an important long-term level and points to a trend reversal
  • Brent crude just manages to close the price gap created by OPEC’s surprise supply cut
  • IG retail sentiment is ‘mixed’ as long positions rise and short positions fall
  • The analysis in this article is based on chart patterns and key support and resistance levels.

WTI oil finds support before closing the price gap

Oil markets have countered the recent sell-off around the long-term $77.40 level. Signs of bear fatigue ahead of the $75.75 level appear to be on the verge of completing a full retracement of the recent gap up.

Subsequent candles showing reluctance to trade lower (via the lower candle wicks) suggest that the bears may be running out of momentum or need an additional catalyst to close the gap. The latest round of OPEC production cuts comes into effect in May and markets may be better balancing the risks of a growth slowdown and reduced oil supply, leaving the market balanced for now.

With the $77.40 level acting as immediate support, if the downtrend continues, the next level to watch is the $77.40 level. Resistance is at $79.10, followed by the resistance zone at $82.50.

Oil (WTI) Daily Chart

Source: TradingView

Brent crude oil has suffered a slight setback after being just a few ticks away from fully breaking the price gap. After yesterday’s gains and the subsequent continuation of the move in early US trading, the potential for a pullback is growing. Support is provided by the zone around $79.89 and the 50% retracement of the major move from 2020 to 2022 at $77. Resistance is at $89, some distance away.

Brent crude oil daily chart

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Source: TradingView

Oil (WTI) retail sentiment offers mixed outlook as long positioning rises

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Oil – US Crude: Retail trader data shows that 64.72% of traders hold net long positions, with a long to short ratio of 1.83 to 1.

The fact that traders are net long suggests that oil and US crude oil prices could fall further.

The number of traders who are net long is 3.42% higher than yesterday and 33.82% higher than last week, while the number of traders who are net short is 3.94% higher than yesterday and 30.59% lower than last week.

Net long positioning is lower than yesterday but higher than the previous week. The combination of current sentiment and recent changes results in a continued mixed outlook for oil – US crude.

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