Spot Brent crude oil closed in a weak position last week after taking out the minor bottom at $99.77. This shifted momentum to the downside. The next downside target is $87.32. A trade through this bottom will change the main trend to down. On the upside, strong resistance remains $120.00.
With the weak close, any attempt to rally is going to be labored since the market is facing potential resistance at $100.01, $103.93 and $110.16. With the minor trend down, we’re likely in sell the rally mode unless buyers can overtake $110.16 convincingly.
On the downside, the first major area to watch for the return of buyers is the long-term retracement zone at $89.76 to $82.50. The main bottom at $87.32 also falls inside this zone, making it a key value area. Buyers are likely to come in on a test of this area in an effort to defend the long-term 52-week moving average at $76.82.
Weekly Outlook
OPEC+ and driving season data are the two gates this week. A unified extension of the 2.2 million barrel per day cuts combined with strong gasoline consumption numbers would tighten the supply picture heading into June and give crude buyers a reason to hold. If OPEC+ cracks or the demand data disappoints, selling pressure builds quickly. The Non-Farm Payrolls report on Friday adds another variable. A strong dollar on top of weak demand confirmation would accelerate the downside.
July West Texas Intermediate crude oil lives and dies at $87.76 this week. Holding it keeps $91.21 and $95.67 in play. Losing it opens the flush toward $80.24 to $74.35 where value buyers will be watching the 52-week moving average at $68.15.
Spot Brent crude oil already broke its minor bottom at $99.77 and momentum has shifted to the downside. Rallies face resistance at $100.01, $103.93, and $110.16. The value zone on Brent sits at $89.76 to $82.50 and sellers will be looking to test it if the headlines cooperate.
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