How Low Can Crude Oil Go?

I asked what the backwardation in crude oil futures was telling us in a May 19, 2026, Barchart article, concluding with the following:

The bottom line is that we should expect lots of volatility in crude oil prices over the coming weeks and months. While the short-term path of least resistance is uncertain, with the potential for a spike or a plunge, the forward curve suggests crude oil prices are most likely to fall over the long term. 

Crude oil could reach a new high, but that would only encourage increased production and alternative logistical routes to the Strait of Hormuz and other passages impacted by Iran and its proxies. 

Nearby NYMEX crude oil was trading at $107.05 per barrel on May 18, with the nearby Brent crude oil futures at $110.92 per barrel. In late June, prices were substantially lower and could be headed back to late 2025 levels. 

WTI crude oil prices have plunged

NYMEX crude oil prices have dropped below the continuous contract technical support level at the April 17, 2026, low of $78.97 per barrel. 

The chart highlights the decline that has taken WTI crude oil futures to the lowest price since late February 2026. 

Brent crude oil has dropped

Brent crude oil prices have dropped below the continuous contract technical support level at the April 17, 2026, low of $86.08 per barrel. 

The chart highlights the decline that has taken Brent crude oil futures to the lowest price since late February 2026. 

Inflation, the U.S. midterm elections, and crude oil prices

While the core inflation data exclude food and energy prices, energy is a critical input across all goods and services. Therefore, the recent hot inflation data is likely to fade in the market’s rearview mirror if oil prices remain below the technical support and continue to decline. Declining inflationary pressures could increase the odds of short-term interest rate reductions under the Fed’s new Chairman, Kevin Warsh. 

Meanwhile, a peaceful solution to the Middle East crisis that sticks could change some of the dynamics leading into the 2026 U.S. midterm elections. Lower crude oil and gasoline prices, falling inflation, stocks at record highs, and the potential for interest rate cuts that could ignite the U.S. economy could have significant political consequences. 

Iran is critical over the coming weeks

While the news out of Washington, DC, remains positive, it is crucial to monitor Tehran's comments and actions, as past experiences have not always aligned with U.S. pronouncements. 

The first thing to monitor is the traffic through the Strait of Hormuz. While the Iranian regime will likely declare victory, their actions over the coming weeks and months regarding cooperation with neighbors and the terms of any agreement will determine if a lasting peace can develop. 

The U.S. energy policy, 2026 developments in Venezuela, with its massive petroleum reserves, the UAE’s OPEC, and the potential for a calmer Middle East could send crude oil prices substantially lower over the coming months.  

Levels to watch and critical support for the energy commodity

Crude oil prices could be heading lower over the coming weeks and months. 

The 20-year monthly NYMEX crude oil futures chart shows that critical technical support is at the December 2025 low of $54.89 per barrel. There will likely be support at $65 and $60 per barrel. In 2020, nearby NYMEX crude oil fell below zero due to a lack of storage. 

Meanwhile, significant changes in oil market dynamics and the U.S. desire to push inflation lower could send prices to lower lows in the $40-$50 per barrel range. The long-term chart highlights lower highs since 2008, and the current price action suggests oil will likely continue to make lower lows. 

However, if Iran does not cooperate and hostilities accelerate, short-term upside spikes remain possible. The bottom line is that crude oil is likely to move lower from the current price level in the current environment.