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West Texas Intermediate (WTI) crude oil futures are flashing fresh bearish signals on the technical charts, suggesting that recent gains could prove short-lived.
Matt Simpson, senior market analyst at StoneX, said in a commentary that the futures market has just posted a “pronounced bearish engulfing” weekly candle — a classic reversal signal — after a false breakout above the $75/bbl level. That move marks what could be a significant top for the market in the near term.
Bear Flag Near 200-Week Moving Average
Simpson points to the formation of a potential bear flag pattern clustering around the 200-week moving average. This is a critical long-term technical level, and the fact that prices are struggling to hold above it is viewed as a bearish sign.
Adding to the caution, WTI futures are now trading below both the 200-week simple moving average (SMA) and exponential moving average (EMA) — technical markers often used to gauge long-term momentum. With the momentum oscillators pointing downward, Simpson says the technical outlook leaves room for further downside, potentially toward the $60/bbl level.
Market Context: Fundamentals Offer Little Relief
Although front-month WTI contracts edged up 0.4% to $64.18/bbl in the latest session, the fundamental backdrop remains fragile. Concerns over slowing global demand — fueled by weaker manufacturing data in both China and Europe — are combining with uncertainty over U.S. trade policies to weigh on sentiment.
Supply-side risks, including potential geopolitical flare-ups, have so far failed to provide lasting support for prices. Meanwhile, speculative positioning has been turning more cautious, with traders scaling back bullish bets in recent weeks.
Key Level to Watch
If prices break decisively below $64, technical momentum could accelerate toward the $60 handle — a level last seen in mid-2023. Holding above the 200-week moving averages would be necessary to neutralize the bearish setup, but for now, charts suggest sellers have the upper hand.