Crude oil futures have fallen to $64.35, a decrease of $0.81 or -1.24%. This drop takes the price below its 100-day moving average of $64.95 and below the range of $64.41 to $65.27. The next price target is the May 9 low of $63.61. Falling below the 100-day moving average suggests potential further declines if prices stay under this mark. However, if prices climb above this level, buyers may become disappointed if the rise does not continue.

EIA Weekly Report and Market Reaction

The EIA’s weekly report showed a crude stock decrease of -3.029M, which usually supports higher prices. Additionally, a new 25% tariff on India was expected to help boost prices. Despite these positive factors, the market reacted negatively; after a brief increase, prices kept falling. Current resistance indicates that buyers are having difficulty affecting the market. Increased supply and lower demand are likely to push prices down in the near future. Crude oil recently settled at $64.35, breaking below the significant 100-day moving average of $64.95. This breakdown suggests that the trend is now headed downwards. Previously supportive levels between $64.41 and $65.27 have now become resistance against price increases.

Market Strategy and Risk Management

The market’s response to recent news guides our strategy for the coming weeks. Even with a larger-than-expected inventory draw of over 3 million barrels, prices dropped, indicating strong bearish sentiment. This echoes a similar trend in late 2024 when positive news did not help a market anxious about the global economy. Recent macroeconomic data shows that global manufacturing PMI has fallen to a 14-month low, primarily due to slowdowns in China and Europe. This raises concerns about future energy demand, and traders seem to be focusing more on this than current supply levels. Presently, attention is clearly on declining global demand. Considering this situation, we should think about positioning for further declines. Buying put options targeting the May 9 low of $63.61, and potentially down to $60, provides a straightforward way to benefit from this bearish trend. Utilizing bear put spreads could also be a smart approach to minimize upfront costs while still capturing a downward movement. Our main risk level is a close above the 100-day moving average of $64.95. If prices sustain above this level, it would indicate that the bearish trend has failed and lead us to rethink our positions. Monitoring price action around this level is essential for effective risk management. Create your live VT Markets account and start trading now.

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