Three Reasons to Be Skeptical of Higher Oil Prices... For Now

1 apr 2022

Oil broke down lower off news that Biden will start to use[url=news.yahoo.com/biden-planning-tap-oil-control-003858440.html ] US oil reserves to the tune of 1M barrels per day and also considered adding [url=businesstimes.com.sg/energy-commodities/us-considers-adding-more-ethanol-to-petrol-to-lower-pump-price-sources ]more ethanol to gasoline to fight soaring costs. This was enough to bring oil down from the $100 handle, albeit briefly. We found support just above our level at 96.88, about 100 ticks north at 97.78 before we saw a nice pivot back to the $100 handle. However, the Kovach OBV is still very bearish after this selloff, so we will need more momentum to come through if we want to solidify the $100's again. If we drop further, then 96.88, 95.24, then 92.03 are the next targets. It does appear that oil has priced in the news, so we are likely to stabilize and form a value area in the low $100's, with $106 a likely target if that is the case.