Technical Analysis

Crude Oil Futures (CL) bounce, long opportunity

CL Futures crude oil with buying opportunity

A quick recap on our CL analysis done earlier in the week needs to be done as CL has failed to break below the support zone. The bulls stepped back in and the chart has put in a solid bottom candle formation.

If we grind down to a shorter time frame, there is a false break candle setup, generally a highly probable setup.

CL hourly chart with flase break candle strategy

CL Trade Opportunities

Bulls can now initiate long positions with a stop loss below the low of that candle around $76. A break below that could likely confirm the downtrend if a strong bearish candle forms. It would be best to only take a reversal in that case if the bearish candle confirm with volume.

Key Events Next Week

OPEC+ Meeting: The upcoming OPEC+ meeting, scheduled for early June, is highly anticipated. Decisions made regarding production cuts or extensions will have a significant impact on oil prices. OPEC+ has been managing supply to maintain price stability, and any changes to their strategy could influence market dynamics​ (Hart Energy)​​ (IEA)​.

Geopolitical Tensions: Ongoing geopolitical issues, such as the conflict between Iran and Israel and tensions in the Middle East, are contributing to market volatility. Any escalation could lead to supply disruptions, affecting prices. For example, recent tanker attacks in the Red Sea have already influenced oil transport routes and prices​ (Hart Energy)​​ (IEA)​.

Economic Data: Economic indicators, such as consumer sentiment and manufacturing data, play a crucial role. Recently, disappointing economic data from the U.S., including lower consumer sentiment and weak manufacturing PMI, have impacted trader sentiment and oil prices. Next week’s economic reports could continue to influence market perceptions and oil demand forecasts​ (Hart Energy)​.

Inventory Reports: The U.S. Energy Information Administration (EIA) will release its weekly crude oil inventory report. Changes in oil inventories can signal shifts in supply-demand balance and are closely watched by traders. An unexpected build or draw in inventories can lead to price fluctuations​ (Hart Energy)​.

Production Trends: Non-OPEC+ production trends, particularly from the U.S., Brazil, and Canada, are critical. Any significant changes in production levels can affect global supply. The U.S. oil rig count and production data will be important indicators to monitor​ (IEA)​.