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Crude Oil Latest – Multi-Month Trend Remains Positive For Now

Crude Oil Latest – Multi-Month Trend Remains Positive For Now

Nick Cawley, Strategist

Crude Oil Price, Chart, and Analysis

  • China’s lockdowns will dent demand in the short term.
  • Volatility remains near a nine-year high.
  • Traders building weekly short positions.

For a list of all market-moving data releases and events see the DailyFX Economic Calendar

The news at the start of the week that Shanghai will start a phased lockdown due to the rapid spread of the Omicron covid-variant, sent oil tumbling on Monday on fears of reduced demand from China’s main financial hub. Brent crude shed around $9/bbl. as the sell-off took hold with the black gold finishing just off its low print. Today’s price action is slightly more positive with a large part of Monday’s losses pared as buyers once again take control of the market. The lockdown in China will hit demand for oil but with the market already disrupted by the Ukraine crisis and wide-ranging sanctions on Russian oil, the sell-off has opened the door to dip buyers. The latest talks between Ukraine and Russia are if social media is to be believed, marginally more positive with further announcements expected later today. Any deal will take weeks of negotiations, leaving oil demand intact, while if a deal is struck it is very unlikely that Russian oil sanctions would be unwound immediately.

The daily price chart shows oil sticking to its multi-month upward trend. The 50-day simple moving average has provided support all year, and continues to do so, and hovers just above the $100/bbl. level. The ATR indicator shows that oil market volatility remains extreme and is at heightened levels last seen nearly two decades ago. Monday’s low at $106.20/bbl. will provide the first level of short term support before the 50-day sma kicks in at $102.30/bbl. The first level of resistance is seen at $120/bbl.

Brent Oil Daily Price Chart – March 29, 2022

Crude Oil Latest – Multi-Month Trend Remains Positive For Now

If we look at US Crude Oil, retail trader data shows 46.73% of traders are net-long with the ratio of traders short to long at 1.14 to 1. The number of traders net-long is 12.07% higher than yesterday and 9.44% lower from last week, while the number of traders net-short is 18.75% higher than yesterday and 38.99% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil - US Crude prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Oil - US Crude-bullish contrarian trading bias.

What is your view on Crude Oil – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.