Markets appear to be disconnecting from some of the traditional risk drivers today. Both the NASDAQ and S&P 500 have surrendered earlier gains and slipped into negative territory, even as Treasury yields remain little changed and crude oil prices continue to move lower.
WTI crude oil is down roughly $3.50 to $87.70, its lowest level since May 29, reflecting a significant unwinding of the geopolitical premium that had built into the market. From a technical standpoint, the bearish turn began on Monday when the price broke below both its 200-hour moving average at $91.77 and 100-hour moving average at $92.77. That breakdown shifted the short-term bias firmly in favor of the sellers.
The downside momentum accelerated today as WTI fell below an upward-sloping trend line on the hourly chart near $88.10. As long as the price remains below that trend line, sellers maintain the technical advantage. The session low has reached $87.37, with the next key downside target coming in at the May 29 low of $86.55.
On the fundamental side, U.S. Energy Secretary Chris Wright noted that a return to normal energy flows could take many months, but also emphasized that shipping traffic through the Strait of Hormuz is increasing meaningfully. At the same time, Israel’s top military commander said recent operations in Iran were preparation for a potentially heavier blow. Despite those comments, traders appear to be focusing more on the gradual restoration of supply flows than on the risk of future disruptions tied to the conflict.
The result has been a sharp pullback in crude prices. Since reaching a high near $97.00 on June 3, WTI has fallen nearly 10%, underscoring the market’s growing belief that supply concerns may prove less severe than initially feared
