Crude oil surged higher over the weekend as geopolitical tensions continued to threaten supply flows through the Strait of Hormuz, raising concerns about potential disruptions to global energy markets.
However, the rally lost momentum after G7 finance ministers met to discuss the situation and postponed any decision on releasing strategic petroleum reserves (SPR) until tomorrow, when economic ministers will revisit the issue. The lack of an immediate supply response helped take some of the heat out of the rally, with prices falling back below the $100 level, giving sellers some renewed hope.
From a technical perspective, the pullback filled the weekend gap created from Friday’s high near $92.39. The price dipped to a session low of $91.63 before stabilizing.
Importantly, the decline held just above the 50% retracement of the rally from the February 26 low, which comes in at $91.65. That level effectively acted as support, helping spark a rebound. The price has since moved back higher and is currently trading near $94.78.
What next?
The next directional move will likely depend on whether price can break above or below the key retracement levels that define the current range.
On the upside, a move back above the broken 38.2% retracement at $98.21 would shift momentum back toward the buyers and reopen the door for a renewed push toward the recent highs.
On the downside, a break below the 50% midpoint at $91.65 would give sellers more control and suggest the recent surge may have been an overextension driven primarily by geopolitical headlines.
For now, the market sits between two key technical levels, with traders watching whether support at $91.65 holds or resistance near $98.21 gives way to determine the next leg for crude oil.
