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Crude oil is now positioned below both the 200-day moving average at $70.69 and the 50-day moving average at $71.43, turning these levels into new resistance. Additional upside resistance stands at the 50% Fibonacci retracement level of $72.11.
On the downside, prices are testing the 61.8% retracement at $70.38, a key level that could trigger a sharper decline. A sustained break below this threshold could accelerate selling pressure toward the next support at $67.09, the December 20 main bottom. Traders are closely monitoring how prices react to this level, as a decisive move could set the tone for the next leg of the trend.
Ukraine Peace Talks Weigh on Sentiment
Oil prices are also under pressure from geopolitical developments, with traders reacting to reports of potential peace negotiations between Russia and Ukraine. A resolution to the conflict could lead to the easing of Western sanctions on Russian crude, potentially adding more barrels to the global supply.
Brent and WTI dropped more than 2% on Wednesday after former U.S. President Donald Trump indicated that both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy had expressed interest in peace talks. Trump has reportedly instructed U.S. officials to explore diplomatic solutions to end the war, raising speculation about the long-term impact on the oil market.
U.S. Crude Inventories Add Bearish Pressure
Adding to the downside pressure, U.S. crude inventories rose more than expected last week, according to data from the Energy Information Administration (EIA). The buildup suggests weaker demand or stronger supply flows, dampening bullish sentiment.
Despite recent signs of tightening supply from U.S. sanctions on Russian oil firms and vessels, traders remain cautious. Optimism around de-escalation in Ukraine could offset these supply concerns, keeping oil prices on the back foot.
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