Supply Risks Ease
US Treasury Secretary Scott Bessent said on Fox Business Network that the US may remove sanctions on Iranian oil already on the water in coming days. This added to expectations of fewer constraints on supply. Oil demand concerns also rose after hawkish comments from central banks, as inflation expectations increased due to higher energy prices. This combination added pressure to WTI. WTI traded near $93.10 while holding above the rising 20-day EMA of about $84.70. The 14-day RSI fell to 66.8 from readings above 80, pointing to weaker upward momentum. Support is seen near $84.70, with further support around $80.00 if that level breaks. Resistance remains at $100.00, and a daily close above it could reopen the move towards $113.80.Key Levels In Focus
Looking back at the events of 2025, the sharp rejection from the $100 mark showed how quickly supply sentiment can turn on geopolitical news. That pullback was driven by signs of de-escalation between Israel and Iran, which temporarily eased market fears. The memory of that volatility, however, is keeping options pricing elevated even today. Currently, the supply picture is tightening once again, contrasting with the situation we saw after those de-escalation talks last year. Recent EIA data shows global petroleum inventories fell by over 12 million barrels last month, and OPEC+ has signaled it will maintain its production discipline through the second quarter. This renewed fundamental tightness suggests the path of least resistance for prices may be upwards. The technical levels from that 2025 correction are now critical reference points for the market. The $84.70 area, which was the 20-day moving average back then, has since become a major floor of support that has been tested and held multiple times. We see the $100 level from last year’s conflict as a significant psychological barrier that will require strong momentum to overcome. Given this context, we see traders positioning for a gradual move higher rather than an explosive one. Bull call spreads are becoming popular, such as buying a May $90 call and selling a May $98 call to finance it. This strategy profits from a rise in WTI prices while capping both the potential profit and the upfront cost. For those expecting more sideways action before a breakout, selling puts or put spreads below the key $85 support zone is a viable strategy. This approach collects premium based on the belief that the market has found a solid base after last year’s turbulence. It benefits from time decay and the still-high implied volatility lingering from those past geopolitical flare-ups. Create your live VT Markets account and start trading now.
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