Commodity: Key Levels for Crude Oil Prices

July 5, 2022, 8:07 pm EDT

Key Levels for Crude Oil Prices

Crude oil prices are important to watch because it determines the intensity of inflation and the activity of the economy. 

There are three key levels to watch for the Western Texas Crude Oil prices: 65, 95, and 125. 

  • 12/2021 – 02/2022: Oil prices went from 65 to 95 where the stock market topped out during this period 
  • 03/2022 – today: the Russia-Ukraine war made oil prices climb to the top 125 where the bear market began

Please note that today’s oil price lost -8% to the $99 level which is closer to the $95 level. When it happens that oil drop to below $95, it could indicate a new phase in the economic cycle. On the one hand, the inflation problem may not be the focal point. On the other hand, we will need to see if inflation becomes a recession. 

Economic sensitive commodities or stocks like steel (X) and copper (FCX) made a strong rally from January to April. But, they lost all the gains from April to July. If oil would participate in the downtrend with other commodities, then it seems to indicate that the stock market quickly transfer from inflation to recession in the past few months.

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