US crude oil is not simply biding its time in more active conditions in the broader financial system. The commodity continues to show significant realized volatility and has recorded swings of 10-15% in one to two weeks. However, a decisive tendency remains alluded to.

US Oil Technical Forecast Talking Points:

• WTI Crude’s generally bullish trend over the past two years has seen more consolidation in the past two months than anything since the market turned negative.
• Realized volatility remains extremely high for the commodity, with the rolling 20-day ATR still hovering around the $5 per day range
• I consider 115 and 100 to be important technical limits to true trends, with COT net long interest 3-year lows showing a speculative bias

Technical Forecast for US Crude Oil: Neutral

The fundamental charge around crude oil is difficult to eliminate, even as the market acclimatizes to its influence on the supply-demand mix. Russia’s invasion of Ukraine continues, and the Western world, in turn, continues to impose sanctions on the aggressor – putting pressure on the global supply of the needed resource. And yet, commodity prices have not reached new heights. Perhaps the one-sided pressure is being offset by lower growth forecasts (China and the rest of the world), but the technicians are focusing on the charts to see when the balance will finally snap one way or the other. There is a wide range forming with the double top just above 115 and the combination of rising trendline support with the 100-day SMA around 100. Even volatile daily activity will likely halted until we can clear one of these two barriers. An upward move would follow the prevailing trend, but a downward breakout would likely be the most charged technical resolution. Either way, the ongoing level of volatility is creating pressure with the narrow band his market is moving with. In other words, we are heading for an eventual breakout/lower. The question is whether it will happen this week or later.

US crude oil chart with volume and the 20,100 days SMA, 20 day ATR and 50 day range (Daily)

Chart created on Tradingview platform

As for the WTI Crude daily chart, there remains a bullish bias, but I think it’s important to point out the broader technical considerations. While we still have an upside projection to 130 should the 115 double top break, I don’t think that’s much room for intentional training. Alternatively, a downside breakout that slowly turns the tear is unlikely to result in a persistent trend. It seems much more likely a market that will respect technical limits with test/pause/break stages. While most are looking for the direction of a possible breakout, I think market volatility is the hallmark and the range allows for a more practical approach. Consider the ‘wicks’ on the weekly oil chart where some of the most important upper and lower ‘tails’ over this period date back well before the 2008 crisis and raise my assumption that systemic movement is possible.

US crude oil chart with volume and Highlights (Weekly)

Chart created on Tradingview platform

Pending resolution of the speculative crude oil ranges, it’s worth pointing out that traders are in the lead. Using the CFTC’s Commitment of Traders (COT) report, there has been a significant push against the advance over the past few years. In fact, net speculative futures positions have fallen to lows dating back to late 2018. I will say that speculative interests can often be irrelevant as there is an appetite for model convenience. That said, it seems that the market’s propensity for noncommittal volatility is well founded. Just keep an eye out for those outer technical limits.

U.S. Crude Oil Futures Chart Overlaid on Speculative Futures Net Positioning (Weekly)

Chart created on Tradingview platform