Oil turns bullish but WTI faces its key resistance range once again

Oil prices have regained their bullish bias after three weeks of stable ascent. US crude (WTI) is up 13% since the lows on June 4 gaining almost $10 per barrel. The Relative Strength Index (RSI) has also regained significant room above the mid-line suggesting that bulls are back in control. But oil prices can be very volatile and momentum can quickly turn. For now, the path of least resistance seems to be higher but WTI has entered its key resistance/support range between $80.65 and $82.54 which has served as an area of reversal in the past. 

US Crude (WTI) daily chart

(Past performance is not a reliable indicator of future results.)

With the moving average placed below the price and the 20-day line quickly closing the gap with the others, it seems like the bullish momentum could continue as long as the price remains above $80 over the coming days. The upper bound of the key range at $82.54 is going to be a tough level for buyers to crack and even if they do, the momentum could potentially only last a little before a reversal ensues. The last time WTI broke above its key range with all four of its simple moving averages below it the momentum lasted until $87 per barrel before the pullback took over. 

Markets seem to be focused on the prospects of improving crude demand as the summer season gets underway, but also with hopes of strong economic performance in the months to follow. Meanwhile, official data shows inventories dropped in the week starting June 10th but the drawdown was not as big as expected. The inventory data has been quite volatile recently, with large drawdowns followed by equally large increases.

Elsewhere, failure to achieve a ceasefire between Israel and Hamas has kept the risk of escalating conflict in the region elevated, keeping crude oil prices underpinned.