On the daily chart below, we can see that the price has been stuck in a range since December 2022. There’s a battle between buyers betting on short term surge in demand coming from China reopening and less supply due to geopolitical risks like the Russia-Ukraine war, and the sellers betting on a global recession as central banks tighten monetary conditions well into restrictive territory to weaken demand.
The $70 level was the trough before the market started to range as at that price the US said that it will refill its Strategic Petroleum Reserves (SPR). In case the price breaks up, we should see a rally toward the 93.75 resistance. On the other hand, a break down may send the price towards the 60 region.
On the 4 hour chart below, we can see more clearly the current rangebound price action. The best strategy in such environment would be to stay out and wait for a clear break supported by a clear fundamental reason to avoid a fakeout. But one can also “play the range” buying at support and selling at resistance. For further support in this range, one can also wait for the moving averages to turn north or south before taking a position.
On the 1 hour chart below, we can see that at the moment the buyers are targeting the resistance at 82.00. This morning we also got the news that Russia will cut oil production by 500k BPD in March. This sent the price higher as buyers look for less supply going forward.
