The Light Sweet Crude Oil market rallied a bit in the early hours of Wednesday, but found a bit of trouble at the 200 Day EMA as buyers couldn’t follow through.
Light Sweet Crude Oil
The 200-day EMA is an indicator that a lot of people use to determine the trend, so it's not a huge surprise to see that the 200-day EMA has caused some issues, and now it looks like the sellers have come back into the market to determine that we need to go lower. We'll have to wait and see how that plays out, though.
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Geopolitical Factors and Market Outlook
But one thing that is worth paying close attention to is the fact that the Middle East peace process seems to be somewhat opaque and that, of course, causes traders to question where we are going next. The idea of risk appetite coming back into the oil market is probably going to be driven by people worried about the war kicking back on, but it looks like the Strait of Hormuz will be reopened, and if that ends up being the case, then it should flood the markets with oil eventually.
It won't be instantly, and we will get the occasional rally, but I think, ultimately, that provides quite a bit of positivity and releases quite a bit of pressure off the market. Short-term rallies, I think, are still getting sold into, as we've seen during the day on Wednesday. The $70 level underneath, I think, eventually becomes your target unless hostilities pick back up.
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