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Did Oil Prices Just Top or Will Crude Hit New All-Time Highs?

Oil prices opened near $130 a barrel but are fading from that spot now. How will it respond it from here?

The oil trade has been laced with heavy volatility this year and specifically, within the past weeks. Headlines continue to drive violent back-and-forth action in both directions.

Big rallies aren’t quite met with the same big downside days, but the action is notable — particularly as oil trades during the overnight session.

Shortly after the Globex open at 6 p.m. ET Sunday evening, crude oil futures topped $130 a barrel. That's given an obvious jolt to the Energy Select Sector SPDR ETF  (XLE)

Shorting oil has been a disaster and anyone who went short into the weekend woke up to a painful loss on Monday morning.

Of course, higher oil prices have a direct result on gas prices, which has raised prices at the pump. In fact, energy prices in general have been on the rise, as have commodity prices.

However, the concern is quickly shifting from rising gas prices to a global recession.

Rising inflation has aided the rise in oil prices, but the Russia-Ukraine conflict has been like pouring gasoline on the fire — no pun intended.

Trading Oil

Daily chart of crude oil.

Daily chart of crude oil.

Investors without access to futures trading can also follow oil prices via the United States Oil ETF  (USO) .

Earlier this year, I looked at oil prices and concluded that $100 a barrel was possible. Above that and the $122.50 area was on deck, but I was hoping that wouldn’t come to fruition, given the economic consequences.

Today’s support level was in the $115 to $116 area, which was the two-day high prior to Monday’s session.

For now, that area is holding up pretty well. If it continues to hold as support, let’s see where crude goes from here. Above $120 keep $122.50-plus in play, followed by the highs up near $130.

If we clear the highs, crude can continue to power high. Some traders will inevitably start talking about $150 a barrel, along with the all-time high up near $147.25.

On the downside, keep the $115 to $116 area in mind. Today’s low of $115.54 sits right in the middle of that range.

If it breaks, the $108 to $110 zone is in play, along with the rising 10-day moving average. If all of these levels fail, we could quickly see a dip down to $100 a barrel and the 21-day moving average. For the time being, I would expect that area to hold as support.