Oil prices find themselves delicately poised, teetering on a slender equilibrium where even the slightest disruption in supply could send futures soaring once more. The Relative Strength Index (RSI) indicates deeply overbought conditions, yet the potential for further gains remains, driven by ongoing newsflow and the possibility of drawdowns in US stockpiles. However, a rapid ascent to $93.12 appears unlikely without a substantial catalyst.
On the upside, the formidable challenge is conquering the double top established in October and November of the previous year, sitting at $93.12. While it may seem within reach, it's worth remembering that markets have already factored in numerous potential supply deficits and adopted a notably bullish outlook. If $93.12 is breached, the next target looms at $97.11, marking the high of August 2022.
Conversely, the downside presents a pivotal level at $84.30, derived from the events of August 10. If this level fails to hold, the stage could be set for a significant plunge. In such an event, oil prices may plummet to a critical support level near $78.00.
The situation in the oil market remains a delicate balancing act, with traders and investors poised to respond swiftly to any developments that could tip the scales in either direction.
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