Crude oil has stabilized after the turbulent June caused by the Israel-Iran conflict. With geopolitical issues no longer affecting prices, traders are now focusing on global growth trends. There is a general upward momentum thanks to ongoing government spending and easy money policies. The August 1 tariff deadline might make traders cautious, but any changes in political messages could shift market expectations.

Risks To The Bullish Outlook

Factors that could challenge a positive outlook include concerns about tariffs affecting growth or shifts in interest rate expectations. The market may fluctuate between 60 and 90, but current patterns indicate a possible upward trend. On the daily chart, prices dropped after the Israel-Iran conflict but found support around 64.00. Buyers are looking to push prices higher, while sellers need to break this support to drive prices down to around 55.00. The 4-hour chart shows a peak at 69.00 before the price returned to support. Trading may continue within support and resistance levels, awaiting a possible breakout. On the 1-hour chart, a slight downward trend marks the decline to support. If buyers can break above this trendline, they might push for new highs, while sellers will aim to drive prices lower and break support.

Opportunity For Positioning

The current calm market presents a great chance for positioning. A recent report from the U.S. Energy Information Administration (EIA) indicated a bigger-than-expected drop in crude inventories by 4.1 million barrels. This suggests that buying interest is strong beneath current prices and reinforces the technical support at this level. The emphasis on global growth is warranted, especially with new data showing China’s Caixin Manufacturing PMI exceeded expectations at 51.7, reflecting growth in the world’s largest oil importer. Additionally, futures markets, as per the CME FedWatch Tool, show over a 90% chance that the Federal Reserve will keep interest rates unchanged, easing a significant concern for the markets. This supports the notion that policies are favorable for demand. Looking at the tariff deadline from the previous administration, we can reference the 2018-2019 trade war. During that time, while tariffs caused short-term market fluctuations, the overall driver remained the broader global growth outlook rather than political news. Therefore, we should see any declines due to tariffs as potential buying chances, unless they coincide with genuine economic setbacks. From a derivatives perspective, this outlook suggests selling cash-secured puts with a strike price at or slightly below 64.00. This strategy allows us to earn premium while establishing a buy point at a crucial support level. For those who are more directly bullish, buying a call spread, such as the 65/70 spread, offers a defined way to profit from upward movement toward the upper end of the short-term range. To capitalize on the anticipated stable price movement between support and resistance, traders might consider an iron condor. This options strategy can benefit from low volatility and time decay as long as prices stay between the specified strikes. With the CBOE Crude Oil Volatility Index (OVX) near its recent lows, selling premium becomes an appealing strategy. As we near the slight downward trendline, breaking above it could signal a chance to enter new long positions. A straightforward approach would be to buy near-term call options to benefit from a quick rise toward the 69.00 resistance. On the other hand, a definitive drop below the 64.00 support would signal an opportunity to buy puts, aiming for a deeper correction. Create your live VT Markets account and start trading now.

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