Oil Takes Back Losses as Geopolitical Tensions Remain

Brent crude oil futures (NYMEX: BZ) recouped some of its prior selloff on Wednesday, pushing back above the $82.50/barrel (BLL) level on the back of geopolitical tensions in the Middle East that continue to impose a risk premium on oil prices. Traders are also awaiting OPEC’s March decision on whether output cuts will be extended into the second quarter, bolstering supply concerns that continue to underpin the price. 

However, demand worries have slightly outweighed these supply tailwinds. The sentiment in the market that the Federal Reserve will keep interest rates higher for longer has weighed on the futures, as the US dollar has held firm. However, this could all change with the release of the FOMC meeting minutes later today, where the market could get further cues on the Federal Reserve’s monetary stance and the potential timeline for rate cuts.  


On the 4H chart, an ascending triangle is in play, with the price action teasing a breakdown at $82.51/BLL. The 50-SMA (blue line) could challenge the bears in sustainably moving lower, but if the sellers can break down this support, it could trigger a triangle breakdown for a bearish trend reversal. 

The breakdown’s first level of support is $81.98/BLL. At this level, a pivot could occur to initiate a retracement, but any movement beyond this support could result in a prolonged downturn toward $81.45/BLL. The 100-SMA (orange line) could then come under the spotlight, currently at $81.11/BLL, to potentially initiate a retracement. 

However, if the price fails to close below the 50-SMA, the price could remain within the triangle pattern. Resistance at $83.12/BLL is then the final barrier to cross before retesting the psychological resistance at $83.61/BLL. Here, a pullback could occur for a continuation of the triangle pattern, or a bullish break could be triggered to steepen the uptrend toward $84.14/BLL.  


The Brent crude oil futures have recouped some of their losses from the prior day but are teasing a breakdown of the ascending triangle pattern. Support at $81.98/BLL could be a level to watch to determine whether a retracement could occur or whether the futures are on track for a prolonged trend reversal. 

Sources: Koyfin, Tradingview 

Piece written by Tiaan van Aswegen, Trive Financial Market Analyst 

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