Crude oil prices plummeted significantly yesterday, with a drop of up to 6% during the trading session. West Texas Intermediate (WTI) crude oil hit an intraday low of $66.79, eventually closing down by 5.18% at $67.83 per barrel; Brent crude closed down by 5.21%, at $71.59 per barrel.
The nightmare for crude oil bulls continues. It was unexpected that throughout the day yesterday, crude oil remained relatively stagnant, hovering within the $67-68 range, which indeed left the bulls in a state of frustration. At present, it seems that investors are hesitant to go long or short on crude oil. Those who have entered the market are regretting it, while those who haven't are apprehensive about joining in... Let's analyze the situation together by looking at the news and the market charts to see how we should respond next.
The sharp drop at the opening on Monday was triggered by the situation in the Middle East! The verbal escalation of Israel's attacks on Iran had been building up for so long, raising expectations to the maximum. However, in the end, Israel not only refrained from striking nuclear and oil facilities, but the intensity of the attack was also surprisingly mild. Many investors didn't even notice the news at first, which could be described as a lot of noise but little rain.
After Israel's attack on Iran, the two sides had vastly different narratives about the incident. Israel claimed to have destroyed all of Iran's strategic defense facilities, estimating that Iran's surface-to-air missile capabilities would be weakened for the next two to three years. However, Iran's defense minister stated that Iran had already repaired the damage caused by the Israeli airstrike, and the damage caused by Israel's actions was insignificant. It seems like both sides are playing a game, maintaining appearances, right? But judging by Iran's tone, does "insignificant damage" mean there's no need for retaliation?
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The United States' stance is also quite amusing. The U.S. envoy to the United Nations stated: "If Iran takes further aggressive actions against Israel or U.S. personnel in the region, the consequences will be severe. We believe that this Israeli counterattack should mark the end of direct hostilities between Israel and Iran." Indeed, the world's dominant figure is assertive, making decisions on behalf of others with the implication that disobedience will be met with force. As a result, it is highly likely that the situation between Iran and Israel will now calm down, at least not causing any significant waves. This eases concerns about crude oil, and it is probable that there will be no hope for price increases in the near future.
Looking at the 30-minute K-line chart, since entering the $67 range at 17:00 yesterday, only one K-line briefly pierced through $67, but most of the time the market fluctuated within the $67 range. Does this indicate that most investors currently believe the value of crude oil lies within the $67 range? At 9 o'clock, a death cross occurred, and the market then slowly declined. However, there was no significant change in the energy column on the MACD, and currently, the market has shown a relatively long positive line, which also suggests the beginning of a minor rebound. It is likely that the market will continue to hover around the $67 range without significant changes. Overall, due to the uncertain situation in the Middle East, it is not a good time to enter the market now. It is advisable to wait and watch, keeping a close eye on the developments in the Middle East.
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