Introduction
On Monday the 23rd, Crude dropped 11.6% on the news that Donald Trump attempted to de-escalate the conflict in the middle east.
Early in the week, crude dropped by around 10–11% after reports of possible de-escalation, including a pause in U.S. military action toward Iran. This briefly reduced fears of supply disruptions, particularly around the Strait of Hormuz.
That optimism faded quickly. Conflicting signals from both sides and continued military activity undermined confidence in any near-term resolution. By the end of the week, prices rebounded above $90 as geopolitical risk returned and the market priced in ongoing supply uncertainty.
Market Structure
The overall structure remains bullish. The market is still making higher highs and higher lows, and price continues to hold well above both the 50-day and 200-day moving averages.
What stands out is how shallow the pullback has been. Even after news of possible peace talks, the market just does not trust much that the US government is saying anymore, and the Oil price is back testing the $100 mark.
Volume Profile and Key Areas
The volume profile highlights several important zones that continue to guide price:
The strongest support remains in the $70–$73 area, which is the high-volume node from the prior accumulation phase. That level has not been tested again.
More relevant in the short term is the $88–$90 area, which is acting as a pivot. Price briefly dipped into this zone and quickly found buyers.
Above, the $95–$97 region is emerging as resistance. This is where the market is currently rotating, and it aligns with the recent highs.
Scenarios Going Forward
The most likely path remains a continuation higher, especially if price can break cleanly above the $96–$97 resistance zone. In that case, the next leg could extend toward the psychological $100 level and potentially beyond.
A secondary scenario is continued consolidation between roughly $88 and $97. This would allow the market to build a stronger base before attempting another breakout.
A less likely outcome is a deeper pullback. For that to happen, price would need to lose the $88 level with conviction. That would open the door toward the mid-80s, but at the moment there is limited evidence supporting that scenario.
Probability Table
| Scenario | Description | Estimated Probability |
|---|---|---|
| Bullish Continuation | Break above $97 leads to move toward $100+ | 55% |
| Range Consolidation | Rotation between $88–$97 | 30% |
| Bearish Pullback | Loss of $88 opens move toward $84–$85 | 15% |
Final Takeaway
Crude oil is still in price discovery mode but the bulls remain firmly in control. The market appears to not be trusting what the US government is saying which is why we saw the price recover so quickly after the Monday drop.
From here, a move above $100 would clear the runway for CL to push toward $120. Keep an eye on news to see any developments in the middle east.
This analysis is for educational and informational purposes only and does not constitute trading advice or a recommendation to buy or sell any futures contracts. Futures trading involves significant risk and may not be suitable for all investors. Always conduct your own research and consult with a licensed financial professional before making trading decisions.
