Crude Oil Price Forecast: WTI Volatility Drops

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.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.