Oil appears to have run out out of steam once again, following the bullish rally during May, with $104 per barrel once again proving to be a major stumbling block, and as shown on the daily chart with the yellow dotted line. This was the level at which previous rallies failed in both early March and mid April, with the commodity returning to test support levels below the psychological $100 per barrel on both occasions.

In early trading this morning, the July futures contract is currently trading at $102.77 per barrel and should the commodity continue to fall further, then $101.50 becomes the next logical target.

However, it is interesting to note the volumes associated with the recent decline, which are falling, and not rising, suggesting that rather than representing a major reversal, this is simply a pause point coupled with profit taking and squaring of month end positions.

For a continuation of the recent bullish momentum, the $106 per barrel region now needs to be breached with confidence, and if so, this should then open the way for a further move higher in the longer term, and on towards the $108.80 per barrel in due course where further resistance awaits.

Equity readers can gain exposure to WTI Crude Oil through the United States Oil Fund (USO, quote) ETF that seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The USO will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.

Anna Coulling is a trader with over 16 years’ experience and founder of AnnaCoulling.com