WTI oil prices opened higher on Monday, reflecting increased supply concerns following the recent escalation in the Middle East conflict. This new development raises fears of a worsening crisis.
The price rebounded from last week’s low, recovering about 50% of Friday’s 2.4% decline. However, it has so far remained within a narrow trading range.
Technical indicators on the daily chart show limited potential for a strong recovery. Key resistance levels, including the $78.31 to $78.39 range (daily cloud base and 200-day moving average), are likely to prevent further significant gains and keep the near-term outlook bearish.
Oil has been on a downward trend for the past three weeks and is expected to end July on a bearish note, reinforcing negative signals. Limited upward movements may present better selling opportunities.
The daily chart indicates strong negative momentum, with moving averages in a bearish setup. The convergence of the 10-day and 200-day moving averages could form a death cross. A sustained close below $77.06 (61.8% Fibonacci retracement of $72.46 to $84.50) would confirm the bearish trend and target further declines to $75.30 and $75.00 (76.4% Fibonacci retracement and psychological level).
A significant move above the 200-day moving average, which has capped gains over the past five days, would counter the bearish trend and pave the way for a stronger correction.