Will crude oil remain above the key $60 level?
Crude oil lost 2.42% on Thursday but held above the key support level at $60. This morning, it is trading 0.6% higher, continuing its consolidation following the early April sell-off.
For oil markets specifically, these developments are worth monitoring:
- U.S. President Donald Trump announced the U.S. is "very close" to securing a nuclear deal with Iran, which could potentially introduce significant additional supply to the market.
- The International Energy Agency (IEA) projects global oil supply will rise faster than previously expected this year as OPEC+ members unwind output cuts.
- Despite these headwinds, both WTI contracts are up around 1.5% so far this week following the U.S.-China trade truce.
- Markets are currently awaiting the University of Michigan Sentiment data scheduled for release at 10:00 a.m. today.
Conclusion
Crude oil remains in consolidation, extending its fluctuations after the early April sell-off. The market faces conflicting pressures - potential additional supply from Iran and rising global production are weighing on prices, while the recent U.S.-China trade agreement is providing some support.
The key support zone around $60 remains critical for near-term price action. Oil hasn't retraced as much as stock markets, likely due to greater supply concerns.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The key support zone around $60 remains critical for near-term price action.
- The large crude inventory build reported by the EIA and potential increased supply from Iran are creating significant headwinds.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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