Mapping the Market: Oil refiner stocks may need to catch their breath

​Shares of global oil refiners have surged this ​year, boosted in part by supply ‌disruptions ​related to the U.S.-Iran and Russia-Ukraine conflicts. But technical analysis suggests the rally may be due for a pause before the sector's next chapter unfolds. Click here ‌for a more detailed chart.

The VanEck Oil Refiners ETF (CRAK) spent most of the last decade confined to a well-defined trading channel spanning roughly $17 from top to bottom. Early this year, the ETF broke decisively above the channel's ‌ceiling near $43, quickly reaching the first logical chart target: a move equal to the channel's height, or $60. Since then, ‌CRAK has drifted modestly higher, but at levels near $63 it looks overextended. The Relative Strength Index (RSI), a widely used gauge of market momentum, is flashing overbought signals across daily, weekly and monthly timeframes alike, suggesting the ETF's nearly 66% year-to-date surge may need to ⁠cool ​off.

If the uptrend resumes after ⁠any consolidation, Fibonacci projections — percentage-based calculations technical analysts use to forecast potential price targets — point to $70.5 and then $77 as the next levels to ⁠watch. Caution is warranted, though. A slide below the July high, which is at $56.85 according to LSEG data, could open ​the door to a decline toward the May peak near $52. A break beneath that level would raise ⁠the odds that CRAK is retreating back into its old trading range below $43.

What the chart shows: (Mapping the Market is a daily column written by Reuters journalists. The commentary is based on a ⁠technical analysis of financial charts, ⁠which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute investment advice or trading recommendations. )

(Robert Fullem is ‌a Reuters ‌market analyst. The views expressed are his own. Editing by ​Burton Frierson and Kirsten Donovan)