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Crude Oil Price Forecast: WTI Volatility Drops

Article By: ,  Market Analyst
May 6, 2024 8:04 AM

  • Crude Oil Price Forecast: WTI prices lean towards a bullish reversal 
  • CBOE Crude Oil Volatility Index records new yearly lows
  • CBOE VIX Volatility Index sinks towards decade lows 

Between Crude Oil’s yearly high at 87.29, and the largest yearly correction low at 77.90, the CBOE Oil Volatility Index simultaneously shifted from its yearly highs to a record yearly low on Friday. Contrarian views took the lead at Crude Oil’s yearly high after Brent Call option volumes hit an all-time high shortly before the trend shift. Dropping back to the significant yearly lows, marking a nearly 50% decline, several fundamental factors have stepped into the play: 

  • Geo-political tensions: Israel is sending evacuation orders for citizens out of Rafah for a potential long-expected attack on the Gazan city
  • OPEC+ policies: Confidence is increasing towards another supply cut in June. Saudi Arabia is reflecting its efforts to keep tight conditions in the oil market as it lifted the selling price of Arab Light Crude Oil towards its Asian customers
  • CBOE VIX Volatility sinks towards decade lows, rising a contrarian question towards a volatility rebound

Saudi Aramco Base Oil touches yearly lows – Daily Time Frame – Logarithmic scale 

Saudi Aramco Base Oil is down at 61.8% Fibonacci retracement of the extended uptrend between the October 2023 low and March 2024 high, coinciding with the 2024 yearly lows. Momentum indicators remain in bearish territories, holding ground towards a positive divergence with the latest chart low marked by a hammer candlestick pattern. 

WTI Crude Oil Forecast – Daily Time Frame – Logarithmic Scale 

Crude Oil's price forecast is leaning towards a bullish bias as the price chart marked a low of 77.90 with its relative strength index retesting the oversold levels where the yearly trend originated. As oversold levels do not guarantee an immediate trend reversal, a break below the 77.90 low can potentially hold support near the 77.50 and 76.50 zones. Continuing upward, crude oil prices have the potential to meet the next resistance levels near 82 and 84.40, consecutively. 

Eyes are on potential increasing tensions once again in the MENA region for sudden volatility shifts on Crude Oil charts, accompanied by data releases tied to crude oil inventories and the OPEC meeting in June. 

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