Crude oil is rising on geopolitical tensions and tomorrow’s Fed decision - is the uptrend gaining traction?
Monday’s trading session had little impact on crude oil futures, which closed 0.3% higher after once again pulling back from the $68 level. The market extended its short-term consolidation amid geopolitical uncertainty and stock market volatility. Prices basically continued moving sideways following declines in January and February.
However, today, oil prices are up 1.5%, breaking slightly above $68 and reaching their highest level since March 4. The market is advancing amid heightened uncertainty in the Middle East, and ahead of tomorrow’s FOMC release.
Oil Fluctuating Along $68
Quoting last Wednesday’s analysis, “The daily chart of crude oil futures is still showing a clear downtrend that began with the January 15 local high of $79.39. However, the decline appears to be pausing near last September’s lows, which could be a positive sign for oil bulls.”
Weekly Chart: Crude Oil Still Flirting with Previous Lows
Crude oil continues its medium-term consolidation. Since September 2023, the market has been forming lower highs, which typically suggests a downside breakout. However, consolidation continues for now.
Conclusion
Crude oil attempted to break above recent local highs yesterday but failed, pulling back below the $68 level. However, this morning, the market is gaining again, breaking through this key short-term resistance amid heightened geopolitical uncertainty in the Middle East and other factors.
The market is now awaiting the key Fed release tomorrow, followed by the inventory report.
Is this a good time to open a short position? I don't think so - the market is approaching strong medium-term support levels and could move sideways or rebound.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil breaches the $68 level this morning, but it’s unclear whether this marks the upward reversal.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist