- Crude oil found respite and rose swiftly from May of 2025 lows earlier this week, amidst a period of sufficient oversupply from OPEC countries and downbeat demand forecasts for global consumption.
- As bullish momentum strengthened from Washington’s hawkish intents against Moscow.
- WTI futures are floating near the $61.5 per barrel area, are on track to sustain the headway made in the prior two sessions and rebound further from 5-month lows, as the United States ramped up efforts to restrict flows of cheap Russian oil in energy markets, particularly towards the east.
- Washington’s renewed sanctions package now includes Lukoil and Rosneft, two of Russia’s largest energy players and a number of Russian-based subsidiaries that are tied to them, mirroring the sanctions initiative taken by the UK late last week, which serves as an indirect from of pressure-measure to end the war in Ukraine. Ukraine’s President Zelensky rejoiced, hailing the decisions.
- “Given President Putin’s refusal to end this senseless war, the Treasury is sanctioning Russia’s two largest oil companies that fund the Kremlin’s war machine” noted the US Treasury Secretary Bessent, who also encouraged the hegemon’s allies to join the efforts, adhering to the sanctions, hoping to create a united front against its perceived adversary of the West.
- The European Commission jointed the party as well, earlier today, adopting a new package of sanctions (the 19th) against Russia’s energy infrastructure, tightening its transaction bans. “EU will also impose a full transaction ban on two major Russian oil companies, Rosneft PJSC and Gazpromneft, and sanction 118 additional so-called shadow fleet vessels, which have enabled Russia to evade previous measures” Bloomberg reported.
- The alliance is walking on tight rope however, as their actions may be easily perceived as threatening from Moscow, which explicitly vowed to completely run over Ukraine, spurring fears for severe escalation of tensions, disrupting flows of crude in an oversupplied market.
Technical Analysis of Oil
WTI Chart – Crude futures up 9% since the start of the week, seek to break the monthslong dry spell
- Resistance: 61.50 (R1), 65.60 (R2), 70.40 (R3)
- Support: 58.00 (S1), 55.15 (S2), 52.00 (S3)
Crude futures swiftly reverse course earlier this week, bottoming out near the $56 per barrel area, gained momentum and are currently attempting to break above the $61.50 (R1) resistance ceiling and head to higher ground. Given the resurgence of interest and the fundamental reasons noted above, we alter our assessment towards the bullish case, expecting the momentum to lift the price action to higher ground. Supporting our case is the +DI which upshot to 32 and the drop of the -DI to 21, showcasing the exodus of the bears and the takeover of the bulls. The ADX indicator with a reading of 50 further validates the strength of the move, showcasing strong momentum in favour of the bulls. The RSI reading which rebounded from near the 30 oversold area and moved quickly above the 50 level, further indicates the change in the balance of power. Should the bulls remain in control with a sustaining strength of the momentum, we may see crude break definitively above the $61.50 (R1) resistance ceiling and head for the $65.60 (R2) resistance area. On the other hand, should the bears reclaim the initiative we may see WTI revisiting the $58.00 (S1) support base and head for the $55.15 (S2) support area.
