WTI Crude Oil Futures Rally on Geopolitical Risk and Chinese Stimulus

Energy Update

/ by Blue Line Futures

WTI Crude Oil Futures Rally on Geopolitical Risk and Chinese Stimulus


***ANALYSIS & LEVELS ROLLED TO MAY FUTURES

*** Bias shift to Neutral / Bullish from Neutral

WTI Crude Oil Futures (May)

Yesterday’s Settlement: 67.37 up +0.46 [+0.69%]

WTI Crude Oil futures moved higher yesterday on geopolitical risk, Chinese stimulus announcements, and a global risk-on a trade.

U.S. strikes on Houthi rebels in Yemen brought geopolitical risk back into the spectrum as President Trump made aggressive threats against Iran and their allies in the region.

On Sunday, China announced they will take steps to boost individual consumer’s income through various measures. The measures include stabilizing the stock and real estate market and offering incentives to raise the country’s birth rate. China has kept their 2025 growth goal at 5% and has raised their fiscal deficit target to the highest in 30 years.

Previous stimulus measures have always targeted the supply-side the economy and general industries, this stimulus package is markedly different as it targets the consumer, wages, and retail-consumption directly.

U.S. retail sales also came in stronger than expected, aiding to the risk-on sentiment. Equities rallied while bonds traded flat. The Dollar traded weaker against most major currencies besides the Yen while Gold traded marginally higher.

Today, May Futures are higher by +0.89 [+1.32%] to 68.26

Futures are rallying on Chinese stimulus hopes and the resumption of armed conflict in the Middle East. According to some models, geopolitical risk premia has been all but non-existent, and this rally could have some legs.

Israel resumed strikes on Gaza early this morning, breaking over two months of peace. The ceasefire is still officially in place, and some are speculating that these strikes are somewhat of a political move,to strengthen their hand before returning to ceasefire talks.

We believe this is likely the start of a full reescalation by Israel. Israel also targeted Syria and Lebanon with strikes, threatening the uneasy peace with Hezbollah and rebel factions struggling for power in Syria after the fall of Assad.

In conjunction with the U.S. strikes on Houthi rebels yesterday, the Middle East looks to be returning to full-scale conflict after two months of relative quiet. President Trump stated yesterday that any Houthi attack would be treated as if it were done by Iran. This is a foreign policy signal with wide ranging implications, as the U.S. opens the door to direct strikes on Iran in response to any aggression by Shia military groups in the region.

Technical Analysis:

***ANALYSIS AND LEVELS ROLLED TO MAY CONTRACT
***Bias upgraded to Neutral / Bullish from Neutral

Futures settled yesterday just below our longer-term pivot pocket of 67.50-68.10***, failing to close above or within the level. Today, the Israel strikes have catalyzed trading above this zone, with May futures making a high of 68.50.

Futures will likely settle above the pivot pocket today, planting momentum in the bulls favor. If this is the case, the next target is the three-star resistance level set at set at 68.78-69.09***. If futures settle below the pivot pocket, we may shift our bias back Neutral depending on any updated risks in the market.

With the reintroduction of geopolitical risk to the pricing spectrum, upside bets start looking more attractive. Because of this, we’re shifting our bias to Neutral / Bullish from Neutral. We still like risk-defined bets and were eying 71.00 calls yesterday. Vol will likely be bid today as traders incorporate the Middle Eastern conflict resumption into their pricing considerations.

For intraday trading, our pivot and point of balance is set at….

 

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Futures trading involves a substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy, and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third-party application. Blue Line Futures employees use only firm-authorized email addresses and phone numbers. If you are contacted by any person and want to confirm your identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

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