Oil prices drop sharply as the absence of immediate threats to global supply weakens bullish sentiment

WTI oil prices fell over 6% by early U.S. trading on Monday, as traders took profits following last week’s nearly 13% rally.

The prior surge was driven by easing U.S.–China trade tensions, which boosted hopes for stronger global growth and increased oil demand, as well as by the escalation of the Israel–Iran conflict, which raised fears of a broader regional crisis in the oil-rich Middle East.

However, bullish sentiment faded after weekend hostilities between Israel and Iran failed to impact major oil infrastructure, prompting a shift in market focus as immediate threats to supply appeared limited.

The daily technical picture shows weakening bullish momentum, with the stochastic turning lower just below the overbought threshold—though the overall structure remains positive for now.

The current pullback, following Friday’s strong upside rejection, pushed the price below the 23.6% Fibonacci retracement of the \$55.40–\$77.62 rally (\$72.38) and breached the first of three key support levels at \$70.00, \$69.13, and \$68.49 (psychological level / 38.2% Fibo / 200-day moving average).

A firm break below this zone would further deteriorate the near-term structure and open the door to a deeper correction.

Still, the geopolitical backdrop remains tense, with heightened concerns that Iran may attempt to close the Strait of Hormuz—an action that could sharply drive oil prices higher.

Res: 71.42; 72.02; 72.79; 74.36
Sup: 69.13; 68.45; 66.50; 65.99