Crude oil futures are up, reaching a one-week high thanks to geopolitical tensions and positive economic news. The price increase follows President Trump’s announcement to speed up a peace deal between Russia and Ukraine, which is now expected in 10 to 12 days. This raises worries about possible sanctions on Russian energy exports. There is also optimism about trade deals with the EU and China, which helped boost the market. The EU’s continued sanctions against Russia and possible discussions among OPEC+ to stop increasing production this fall further supported the price rise. However, gains were limited by a strong US dollar and rising global crude inventories.

Technical Analysis Of Price Action

On the technical side, crude oil prices have risen above the 200-hour moving average, which is at $66.26. Staying above this level indicates that buyers are in control for now. The day’s highest price was $67.02, and if this level is surpassed, it could be a positive sign. Traders are looking at a trendline around $67.88. We suggest that derivative traders prepare for higher prices in the coming weeks by buying call options. This approach allows them to take advantage of potential gains from supply risks while keeping their maximum loss limited. Current market sentiment is supported by tight supply and ongoing geopolitical concerns. OPEC+ decided on June 2nd to extend production cuts of 2.2 million barrels per day into the third quarter, which is a strong support for prices. This move, combined with rising tensions in the Middle East, adds a significant geopolitical risk premium. We see supply pressures as the main reason prices aren’t likely to drop significantly.

Demand Side Factors

On the demand side, there are some challenges that could create price swings and buying chances during dips. The US Dollar Index (DXY) has remained strong, above 105, making crude more costly for foreign buyers. Additionally, the latest report from the U.S. Energy Information Administration (EIA) showed a surprise inventory increase of 1.2 million barrels, contrary to expectations for a decrease. From a technical viewpoint, WTI crude is finding support near its 200-day moving average around $77.80. If it decisively moves and holds above the 50-day moving average, currently at $79.50, it would indicate strong bullish momentum. Traders would likely then target the psychological level of $80 and beyond. Create your live VT Markets account and start trading now.

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