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Analysis

Where is the oil price heading?

An oil rig

Crude oil prices fell more than 9% on Monday, pressed by two factors, the lockdown in China’s commercial hub, Shanghai, and signs of a de-escalation in the Ukraine crisis.

Global oil futures prices soared as high as above $130 per barrel in early March, and plunged to $93.53 at its lowest level mid-month. The wide price swings are predominately driven by the outlook on the supply-and-demand front.

The oil markets may face near-term pressure due to relief from the geopolitical tension and the concerns about weakening demands. However, the Ukraine-Russia war is shaping a global trade restructuring between the west and east, leading to a de-globalisation between borders, in which the cost-driven high inflation has little chance to be cooling down. The hedging demands for commodity assets are likely to keep oil's momentum well-anchored around the $100-mark in the medium term.

Crude Oil West Texas (Cash) - Daily

Key technical elements

  • The oil price’s uptrend is still intact, but MACD forms a dead cross, indicating a potential second-day selloff on the way.
  • Stochastic signals the same short-term bearish view, with another potential leg down to enter the oversold territory.
  • The Historical Volatility Index reaches the highest level since May 2020, indicating the bullish momentum may continue when the index goes down.

Key price levels

Supports: $102.90, $97.00, $94.28

Resistances: $112.50, $109.77, $116.90


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