Crude Oil Rally Fades Amid Priced-In Disruptions
The rally in crude oil prices has lost momentum as much of the immediate risk associated with Middle East supply disruptions has been priced in. Escalating tensions, including attacks on tankers and Saudi energy infrastructure, had driven prices above $100 per barrel.
However, physical markets remain tight, and another supply shock could quickly revive the rally. Despite this, the failure to extend above resistance suggests that the near-term risk/reward is becoming less favorable for oil bulls.
The daily chart shows a strong rally into Thursday's high before bearish volatility kicked in beneath the 105.21 high and monthly R3 pivot. The shooting star candle and overbought RSIs add to the case for concern among bulls.
Bears could seek evidence of a false break or lower high below $104 as part of a near-term counter-trend move. Bearish targets could include $100, the 98.48 swing low, and the weekly pivot point near $98.