For those who had been tracking oil’s technical indicators this month, the message was clear: Crude prices had risen too quickly.
OPEC+’s decision to rein in production earlier this month, hedge funds piling into the most bullish positions in over a year and an attack on a Saudi Arabian oil complex all worked to propel Brent crude past $70 a barrel for the first time in more than a year. Prices rose well above the upper Bollinger band that signaled a pullback was all but inevitable. Meanwhile, fuel refiners along the U.S. Gulf Coast were struggling to recover from a deep freeze last month and the pace of oil exports had slowed, weighing on near-term demand.
And so on Thursday, oil’s 30%-plus rally this year came crashing down. West Texas Intermediate crude futures plunged as much as 9.9%. A strengthening dollar and news of efforts to roll out vaccinations stalling in some parts of the world further weighed on the market, as did the usual unwinding of long positions amid big price drops.
But virtually nobody is saying the rally is over for good.
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