Crude Tests Support But Rebounds To Be Little Changed

Oil prices fell sharply in early European trading as the geopolitical risk premium unwound but it then rebounded to be little changed. While there is an uneasy quiet in the Middle East, tensions continue to run high and markets remain wary. The USD index was flat.

• WTI fell to a low of $80.70/bbl but found support here as it is the 50-day EMA. It bounced to $81.90 before falling again. The next recovery was sustained and prices rose to $82.14. They have started the APAC session lower at $82.06. Recent moves point to the start of a short-term bearish corrective cycle. A clear break of the 50-day EMA would signal a stronger bearish theme. The bull trigger is at $86.97.
• Brent closed down 0.1% to $87.16 after reaching a low of $85.79, above 50-day EMA at $85.49. It rebounded to a high of $87.26. A clear break of $85.49 is needed to signal scope for deeper retracement. The bull trigger is at $92.18.
• With tighter sanctions on Iran and Venezuela and signs of increased demand plus geopolitical issues related to Russia and the Middle East always present, crude is likely to find support. But delays to Fed easing worry the market and so this week’s US data, including Q1 GDP and March core PCE prices, will be watched closely. Earnings from key oil companies are also announced this week.