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Today Oil Price Market Analysis

📉 Core Driver: Geopolitical Risk Premium Rapidly Fading

The market theme today is very clear: a longing for "peace." U.S. President Trump publicly stated that the likelihood of reaching an agreement with Iran is very high, even mentioning that the Strait of Hormuz may be "open to everyone." This was interpreted by the market as an extremely strong signal, implying that the ongoing supply disruption crisis affecting millions of barrels of oil transportation daily for months could see a turning point.

Although Iran is still assessing and the agreement has not been finalized, the market's reaction is always ahead of the facts. The "risk premium" previously priced into oil due to war fears is being rapidly stripped away.

📊 Latest Market Data

As of tonight Beijing time (May 7), the market is still digesting yesterday's huge decline, with volatile prices:

‌Brent Crude‌: Currently around ‌$98.09 per barrel‌. After a nearly 8% plunge yesterday, prices continued to dip during the session but are now struggling below the $100 mark.

‌WTI Crude‌: Currently around ‌$91.94 per barrel‌. Similarly, after a 7% drop yesterday, it is now seeking support above the $90 level.

Notably, some intra-day data even shows WTI briefly falling to around $88, and Brent touching lows of $96, indicating intense battle between bulls and bears.

🗺️ Key Support and Resistance Levels

Considering the current extreme market conditions, the following levels are worth close attention:

‌Key Resistance‌:

‌$100 per barrel (Brent)‌: This psychological integer level becomes a short-term key resistance after being broken. If market sentiment improves and oil prices rebound, this will be the first test.

‌$101.27 per barrel (Brent)‌: This is the settlement price after yesterday’s plunge and an important psychological reference point for traders. Whether it can recover this level is crucial in judging whether the bearish momentum is waning.

‌Key Support‌:

‌$96.75 per barrel (Brent)‌: The intraday low yesterday, forming the most immediate technical support.

‌$95.08 per barrel (WTI)‌: Yesterday’s settlement price for WTI, serving as a short-term support reference. If WTI falls below this again, it could trigger further selling.

‌$90 per barrel (WTI)‌: For WTI, the $90 mark is the current "Maginot Line" for bulls.

🔭 Market Outlook: Wavering Between Hope and Reality

The future trend will depend entirely on the race between "expectations" and "reality":

‌Short-term "Expectations" of Negotiations‌: The market is currently dominated by news about U.S.-Iran negotiations. Any positive news regarding the progress of the agreement could continue to suppress oil prices; conversely, if discordant signals emerge, suppressed safe-haven sentiment could trigger a sharp rebound, causing a retaliatory surge in oil prices. This "hearing the wind and believing the rain" state will keep market volatility high.

‌Medium-term "Supply Reality"‌: Even if an agreement is announced tomorrow, it will take weeks for shipping through the Strait of Hormuz to return to normal. Meanwhile, global crude oil inventories, especially U.S. distillate stocks, have fallen to their lowest levels in 20 years. This supply-demand tightness has not immediately changed due to peace expectations. This means that after emotional selling subsides, there is actual support below, and a complete collapse is unlikely.

‌Beware of "Black Swans"‌: Reports indicate that before yesterday’s major news was announced, the market had already seen extremely precise mysterious large short positions, which have attracted regulatory attention. This reminds us that besides geopolitical risks, market manipulation risks should not be overlooked.