July Brent crude oil futures are still in an uptrend despite Monday’s gap lower opening. However, momentum has shifted to the downside. Nonetheless, the uptrend remains intact.
A trade through $115.24 will reaffirm the main trend. A trade through $86.06 will change the main trend to down.
The market is currently tied up inside a retracement zone at $97.21 to $100.65. This is slightly below another retracement zone at $102.75 to $106.69. These levels could provide headwinds unless there is a bullish catalyst driving the price action.
If sellers continue to pound the downside, the market could collapse into the long-term retracement zone at $89.06 to $81.89. This is the last support before the 52-week moving average at $74.89.
Unlike the WTI market, the uptrend in Brent is not that strong so any rally is going to be a labored event until buyers can cross to the strong side of $106.69.
Weekly Outlook
Tehran has not confirmed a deal. The hard terms are untouched. U.S. military strikes hit Iranian targets hours after Monday’s selloff. Three facts and all three say the same thing.
The risk premium everyone tried to sell on Monday is not gone. It got repriced lower on a headline and then the headline fell apart. Until tankers are moving freely through the Strait of Hormuz with falling insurance costs and no military escorts, every selloff is a buying opportunity for traders who understand that hope is not the same thing as a signed agreement.
July WTI crude oil flushed to $89.41 on Monday and held the intermediate retracement zone at $91.21 to $87.91. That zone decides the week. Above it and buyers stay in control with $95.67 as the first target. A break under $86.13 flips the structure entirely and hands momentum to sellers looking for $80.24 to $74.35.
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