Crude Oil Market: A Wild Week That Had Bulls Laughing Out Loud and Bears Collectively Self-Destructing

Dear readers, if your futures account is still gasping for air, it probably means you chose the right direction last week. WTI crude oil futures this week demonstrated a textbook example of an +11.41% weekly gain—not the part of teaching, but the chapter on "Risk Education." As of the close on April 5th, WTI was at $111.54 per barrel, and Brent at $109.03 per barrel, both achieving a feat that made the old men with gold-rimmed glasses on Wall Street rub their eyes in disbelief.

If you think this rally isn’t eye-catching enough, look at the destructive power of this single daily candlestick—on April 2nd, WTI dipped as low as $97.50, then traders went into a frenzy like at a buffet, pushing prices up to $113.97 in one go, setting the largest single-day increase since 2020. This kind of movement—being pushed down into the abyss and then pulled back up to the sky—is what traders call—"Get used to it."

Last week’s oil prices were like a boxer on jumpy sugar, hitting hard and deadly. A single sentence from Trump—"In the next two or three weeks, we will hit Iran hard"—immediately sent the shipping risk premium for the Strait of Hormuz from rational to madness. About 20% of global maritime oil trade was suddenly paused, and the scale of this supply-side shortage was so huge that even the IEA’s release of 400 million barrels from strategic reserves—the largest in 52 years—only covered about 20 days of supply loss. It’s like your faucet burst, your neighbor brings a bucket of water, very sincere, but still not enough to plug the gap.

Supply and demand drama: inventories rose, and oil prices also rose—this just doesn’t sound right

Here’s a joke first. Last week, the EIA reported that US crude inventories increased by 5.45M barrels, while the market only expected an increase of 810,000 barrels. The extra amount was enough to make Livermore’s coffin lid flip three times.

According to textbook logic, soaring inventories should push prices down. But last week’s market taught us—when the Strait of Hormuz is tightly closed and millions of barrels of Middle Eastern oil can’t get out daily, the extra inventory in the US storage is like telling someone trembling outside the door, “Relax, you still have two peanuts in your pocket.”

More intriguingly, WTI rare premium over Brent approached nearly $3, hitting the highest level in a year. This usually indicates that the US domestic market is tighter than the international market—and in the current context, it sends a more direct signal: the market no longer fully trusts the fragile global supply chain. You can write “delivery available” on your London contract, but whether ships can sail into the strait is another matter.

OPEC+’s production increase drama: the highest realm of paper talk

Just as the bulls were celebrating breaking above $110, a strange wind blew from the backyard.

On Sunday (April 5th), the eight OPEC+ member countries are scheduled to hold a meeting, with a clear agenda—discuss increasing production. Sources say the alliance might further raise quota levels, ostensibly to prepare for the Strait’s reopening. One source said—“We must respond, at least on paper.”

In plain language: first, make a verbal statement; actual action? We’ll see.

Increasing production from three angles looks extremely awkward. First, core oil producers like Saudi Arabia, Iraq, Kuwait, and the UAE are unable to increase output due to the Strait blockade. Second, Russia, Kazakhstan, and other unaffected countries have limited capacity to boost production—no rice, no cook. Third, even if they do increase, that small increment is like tossing a grape into the Pacific compared to the daily shortfall of millions of barrels.

So, the essence of this meeting is—OPEC+ sitting on the sofa, staring at an empty fridge, seriously discussing what to cook tonight. The signal is more important than the actual effect, but markets never take these signals lightly. Once there’s any hint of the Strait reopening, these “paper increases” will turn into real selling pressure.

Running between two ends: where will oil prices dance next?

Let’s look at some concrete numbers to help everyone with a map.

The pivot point on the WTI daily chart is at $99.98, with the strongest support and resistance zone between $89.84 and $110.27 per barrel. Last week’s movement already pushed the upper boundary of $110.27 underfoot, indicating that the technical structure has formed a new high-level reference point. For Brent, $102 has become a new short-term support level, and the $100 mark has been repeatedly tested and confirmed as effective.

As for the ceiling, JPMorgan’s latest report suggests that if the Hormuz Strait supply disruption continues into mid-May, a breakout above $150 per barrel is not impossible; in the short term, even under neutral and reconciliation scenarios, oil prices are likely to stay above $100 in Q2. Citigroup’s baseline scenario is more moderate, projecting Brent at around $95 in the second half, but in an extreme supply shortage scenario, they also give an upside potential of $130.

In summary, the current key support level is around $100. If it breaks, bulls will swarm like during the New Year, grabbing this level as a big gift. Resistance is in the $115–$120 range. If there’s no sign of easing in the Strait situation, this ceiling is likely to be broken too.

A special reminder—WTI’s RSI indicator is approaching the overbought threshold of 70, and short-term profit-taking risks are building. Don’t throw your stop-loss into the trash just because of the rapid rally; prices go up fast, and they fall even faster.

Pouring cold water: after the biggest risks are fully priced in

The market now seems to have formed a belief—oil prices will only go up, not down. But don’t forget, just a month ago, JPMorgan and Goldman Sachs were discussing when oil would fall to $50. The collective consensus is often the prelude to the most dangerous reversals.

In the current bullish narrative, the cornerstone is the closure of the Strait of Hormuz, but this cornerstone has a fatal weakness—it’s already very well priced in. Every additional day of Strait closure adds another day’s premium into the price. Conversely, once any reopening signal appears, this premium will collapse within minutes, and oil could fall from $110 back to $90 or even lower—just like a trader sipping coffee.

Of course, this judgment hinges on the Strait actually reopening someday. With Iran and the US constantly escalating rhetoric, whether that “day” is tomorrow, next month, or next year, no one can say for sure. But one thing is certain: when everyone believes the risk will never be resolved, the risk itself becomes the greatest risk.

Current market assessment: WTI is likely to fluctuate strongly in the short term, with key support at $100 and resistance at $115; Brent is similar. Hold on tight, long positions should set stops, and for shorts… maybe find a psychologist first.

(The above is for reference only and does not constitute any investment advice. Trading involves risks. Please trade cautiously and prioritize capital preservation.)