Crude oil futures ended at $64.52, rising by $1.22 or 1.93%. This increase has pushed prices above the 100-day moving average of $64.32, giving a more hopeful outlook. Nonetheless, the price is still below 50% of the range since the April low of $66.36 and under the declining 200-day moving average at $67.01. Breaking above these levels could signal a stronger technical stance for oil prices.

Possible Shift Toward a Positive Outlook

Crude oil’s price moving back above the 100-day moving average hints at a potential shift toward a more positive outlook. For this bullish sign to be valid, we need the price to stay above $64.32 in the upcoming trading sessions. This stability is the first step toward a possible recovery. This movement is backed by the latest data from the Energy Information Administration (EIA), which reported a bigger-than-expected drop in U.S. crude inventories of 4.1 million barrels last week. This suggests that demand is currently outpacing supply, giving a solid reason for prices to increase. We are also keeping an eye on OPEC+, as they have reaffirmed their commitment to production cuts through the end of the year. With this cautious optimism in mind, derivative traders might think about strategies like buying bull call spreads. This strategy allows us to take advantage of a potential rise toward the $67.00 resistance level while limiting our risk. Key levels to watch are the 50% retracement at $66.36 and the declining 200-day moving average around $67.01.

The Global Demand Situation

The global demand situation presents a mixed outlook. Recent PMI data from China showed a slight uptick, indicating stable industrial demand. However, ongoing inflation in Europe raises concerns about a slowing economy. We see a balancing act here, with supply constraints currently outweighing demand worries. Given the sharp price fluctuations in 2022 and 2023, it’s essential to manage risk carefully in this environment. Setting stop-loss orders just below the 100-day moving average is a smart move to guard against a false breakout. If the price cannot maintain this level, recent gains could quickly disappear. Create your live VT Markets account and start trading now.

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