Typically when warning about speculating in commodities I will always add a line or two about using proper risk management, but on this occasion I want to start by saying hold onto your seats and get ready for a properly wild week to come in WTI Crude Oil trading.
The commodity finished Friday’s trading via futures around the $95.790 price and went into the weekend flirting with lows made only a handful of hours before.
WTI Crude Oil challenged the $94 mark on Friday before moving slightly higher as a little dose of caution entered the marketplace. However, the fact that the U.S. has gone into a long holiday weekend via its Memorial Day observation tomorrow and oil is traversing within lower depths is a major clue. Large players were less worried about WTI Crude Oil volatility upwards even with a few days of non-trading standing before them.
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Trump, Iran, and WTI Crude Oil
Whispers have grown from rumors into confirmed news reports that the U.S. and Iran are approaching some type of resolution regarding the military conflict that has flared since the end of February. If reports turn out to be true this week and a signed agreement begins to become formalized and the Strait of Hormuz is declared open, this will impact WTI Crude Oil in a hasty manner. Look for a potential agreement that starts with an extended ceasefire while formal details are being worked on.
Let’s remember that WTI Crude Oil was trading below $70 a barrel before the start of the Iranian saga. If large traders feel comfortable with the possibility that Crude Oil and other energy resources are going to start flowing without major shadows darkening tanker navigation and other logistics, WTI Crude Oil will drop in price. The question is by how much. The opening of WTI Crude Oil in the spot and future markets this week will be watched by all global traders.
A Lot Could Go Wrong Still in WTI Crude Oil
As a reminder, nothing is guaranteed in the Middle East. The deal between the U.S. and Iran could still go wrong and if that happens the cautious price and higher realm of WTI Crude Oil will still be practiced.
- Day traders should not bet blindly on lower prices even if an agreement between the U.S. and Iran is announced, because intraday trading will be volatile.
- However, the price of WTI Crude Oil will certainly be entertaining and if an agreement is promised, large players and value momentum in the energy sector must be watched.
- Price velocity downwards upon opening the WTI Crude Oil market and letting it settle will be challenging for anyone currently holding an open position, and for those who want to jump in and pursue the commodity.
WTI Crude Oil Weekly Outlook:
Speculative price range for WTI Crude Oil is $72 to $102
Large traders of WTI Crude Oil will be braced for dynamic prices and might lean heavily into selling positions, but first getting a confirmation that a deal between the U.S. and Iran is legitimate will factor into trading psychology. However, there may be some big players who actively gamble this week in WTI Crude Oil early while looking at technical charts that show when the initial ceasefire was announced at the end of the first week in April, the price of the commodity did go below $80 in mid-April. Meaning speculators without deep pockets who want to try their luck via wagers in WTI Crude Oil will need to be extremely careful.
The commodity is going to be a talking point before and after the week’s trading begins as the U.S. Memorial Day observation concludes. It should be said just as a matter of record, that some contrarians may not believe an agreement will take place between the U.S and Iran, or at a minimum it will prove more difficult than expected. If news begins to circulate that not all is well regarding the negotiations, then WTI Crude Oil may remain transfixed within it current cautious higher realms.
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