Crude oil futures have decreased to $64.35, marking a drop of $0.81 or -1.24%. This decline brings the price below its 100-day moving average of $64.95 and beneath a range from $64.41 to $65.27. The next focus for prices is the May 9 low of $63.61.
The break below the 100-day moving average serves as an indicator of potential downward movement if prices remain under this level. In contrast, a rise above could lead to dissatisfaction among buyers if the breakout does not hold.
EIA Weekly Report and Market Reaction
The EIA’s weekly report disclosed a crude stock draw of -3.029M, which would typically support prices. Additionally, a newly imposed 25% tariff on India was expected to prop up prices. Despite these factors, the market response was negative; following a short-lived rise, prices continued their decline.
Current resistance suggests buyers are struggling to influence the market. Expectations of higher supply and reduced demand appear likely to steer prices in the short term.
We have seen crude oil settle at $64.35, breaking below the key 100-day moving average of $64.95. This technical breakdown suggests that the path of least resistance is now lower. The area between $64.41 and $65.27, which was once support, has now become a ceiling for any price rallies.
Market Strategy and Risk Management
The market’s reaction to recent news is very telling for our strategy in the coming weeks. Despite a larger-than-expected inventory draw of over 3 million barrels, prices still fell, indicating that bearish sentiment is firmly in control. This reminds us of a similar pattern in late 2024, where good news failed to lift a market worried about the global economy.
Current macroeconomic data supports this weakness, as recent figures show that global manufacturing PMI has dipped to a 14-month low, led by a slowdown in both China and Europe. This fuels concerns about future energy demand, and it seems traders are pricing this in more heavily than current supply levels. For now, the focus is clearly on weakening global demand.
Given this backdrop, we should consider positioning for further downside. Buying put options targeting the May 9 low of $63.61, and potentially the $60 mark, offers a direct way to play this bearish momentum. Using bear put spreads could also be an effective strategy to limit upfront cost while capturing a move lower.
Our primary risk level is a close back above the 100-day moving average at $64.95. Any sustained trading above this level would signal that the bearish breakdown has failed and would force us to reconsider our positions. We must watch the price action around that specific level as our guide for risk management.
