Crude Soars to Highest Levels Since 2022
Crude Hits $120 p/b
We’re seeing record moves in oil at the start of the week with crude futures exploding higher. CL1 rallied around 30% from Friday’s close hitting highs of just shy of $120 p/b, levels last seen in summer 2022, before reversing lower to trade around $102 p/b as of writing. The seismic shift higher comes amidst the ongoing war between the US/Israel and Iran which continued to escalate over the weekend. Energy infrastructure in Iran and around the Middle East has been heavily damaged as a result of the conflict, which shows no signs of abating yet as both sides continue to step up attacks and rule out a ceasefire near-term. As a result of the record move in crude prices, G7 leaders are due to meet this week to discuss the release of strategic oil reserves in an attempt to buffer the global economy from the brutal impact of such elevated energy prices.
Strait of Hormuz Disruption
As well as damage to refineries and other output infrastructure, crude prices are also rallying on fears that the Strait of Hormuz will remain closed for an extended period of time, causing huge disruption to global supply. Trump has warned that the conflict with Iran could take up to 8 weeks to bring to conclusion. However, many fear that a prolonged conflict will develop leading to higher oil prices as a permanent feature over the coming year. Only news of a ceasefire or willingness to negotiate is likely to help prices settle lower near-term with prices vulnerable to fresh upside shocks in response to any incoming news showing the conflict has escalated.
Technical Views
Crude
Best viewed on the monthly chart currently, the rally in crude has seen price trading up to just shy of a test of the long-term bear trend line from 2008 & 2022 highs. Price is now rebounding lower from that $120 zone and if seen back below $100, $95.06 will be the next support to watch. Topside, the trend line and $123-level remains the key resistance area to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.