WTI Crude Oil has slid lower over the past three days. The U.S White House has opened the door for speculators to wager on lower momentum because of public statements and reports ‘leaked’ to the press that military escalation – read conflict – appears off the table for the moment. WTI Crude Oil which has been suffering from a lack of clarity regarding which direction the U.S administration was leaning towards regarding its Iran policy has certainly seen values decline as it becomes evident less saber-rattling is wanted. This leaves day traders a tempting trading landscape – one that remains challenging however.
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WTI Crude Oil Drops as Middle East Escalation Fears Ease
While Iran continues to offer a semi-loud stance regarding its defiant attitudes about U.S White House policy, seemingly shifting sentiment and supply has proven to be enough via the Hormuz Strait and other global oil production and logistical operations to cause a rather steep reduction in WTI Crude Oil prices the past few days. Yes, traders now have to decide if this sudden shift to a more optimistic outlook will last (or more importantly perhaps – how long it will last). The temptation to believe WTI Crude Oil prices are showing signs of trajectory downwards is attractive, but ladies and gentlemen we have seen this show before. The U.S White House has certainly produced soundbites the past day which is encouraging the belief that calm is prevailing and the U.S economy will be stronger, this as they seemingly hope to battle fears of inflation via cheaper energy costs.
WTI Reverses From $88 and Tests the $81 Level
As of this morning, suddenly WTI Crude Oil is challenging values slightly below $81.000. Crude Oil was priced near $86.550 mid-day yesterday. However, after a variety of statements, including Secretary of State Marco Rubio’s words stating no escalation is expected for the time being in the Middle East, velocity downwards developed. The price of the commodity is near $80.750 as of this writing.
The price of WTI Crude Oil had touched values above $88.000 on Thursday and Friday of last week, this is when more sources repeated that Crude Oil was being shipped out of the Hormuz Strait using U.S Navy escorts and by turning off AIS transponders. Now traders need to see if the price of WTI Crude Oil remains sustained below $81.000 and if it can flirt with deeper declines. WTI Crude Oil was trading near $75.000 on the 5th of August. However, while that lower mark may feel attractive as a target, it also shows that lower prices the past half year in the energy market have been able to produce violent reversals – yes, in both directions.
Oil Prices, Inflation Expectations, and US-Iran Headlines
While it is apparent the U.S administration would like to keep things calm between Iran and the U.S military in the near future in order to make global markets rest easier, this may not be so easy. Not to say Iran suddenly wants to escalate the conflict either, but all it takes is one surprising spark to ignite troubles. Having said that, President Trump no doubt understands that cheaper WTI Crude Oil prices will help calm inflation concerns, which in step might ease U.S long-term Treasury yields decrease. What day traders – even if they are technical speculators – need to understand is that it is sentiment that is driving the WTI Crude Oil market. And it appears the U.S White House wants the price of WTI Crude Oil to traverse downwards. Momentum lower has been impressive the past few days, now traders need to decide just how low the commodity can sell off.
WTI Crude Oil Price Chart
Why WTI Remains Vulnerable to Sharp Geopolitical Reversals
Betting on a continued path downward in WTI Crude Oil may feel enticing. The lower values seen only a few weeks ago are appealing as targets. Yet, solid risk taking tactics are needed by retail traders. Again, we have seen lower values before suddenly jump higher when verbal (and military storms) have developed rapidly over the past handful of months. Seeking lower values should be done with diligent risk management to guard against sudden bad steps by Iran and the U.S government. Momentum should be watched intently in WTI Crude Oil.
WTI Crude Oil Technical Levels: $80.50 Support and $81.03 Resistance
The path lower in WTI Crude Oil has looked like a parade the past day. Velocity lower was significant, but early morning action has seen a sustained support level develop around $80.500. Short-term traders need to use entry price orders if they want to get an exact fill while market conditions remain fast. Intraday fluctuations are likely to be volatile today and into tomorrow. Do not discount the fact that while the U.S wants to promote calm, Iran may want to ruffle some U.S government feathers near-term.
WTI Crude Oil Short Term Outlook:
Current Resistance: 81.030
Current Support: 80.550
High Target: 81.700
Low Target: 78.800
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