FUNDAMENTAL
OVERVIEW
Crude oil extended the losses yesterday as hopes of
de-escalation continued to grow ahead of Trump’s meeting with Gulf leaders and
potentially Iranian President Pezeshkian at the UN General Assembly.
Moreover, the Financial
Times reported yesterday that Gulf governments have called for a reset in
relations with Iran, with the UAE pushing for a “new mindset” and Qatar
advocating for a regional “security framework” with Iran following the
conflict, which exposed their vulnerability to Iranian attacks and undermined
confidence in the US security presence in the region.
The Qatari Prime Minister called the war against Iran,
initiated by the US and Israel in February, a “wake-up call” during a side
event at the UN General Assembly. He stated that the Gulf needs to “act
responsibly as a region and have good relations with Iran”. He added that they
are working toward that goal and that regional partners believe in it.
This is a strong indication that Gulf leaders have had
enough of the war with Iran and are pushing for an end to the conflict. This is
yet another sign that we are entering a de-escalation phase, with markets
positioning for that outcome. The US is also facing a strategic munitions
shortfall, as confirmed by the Pentagon last week, so there are several
constraints increasing pressure on Trump to end the war.
It goes without saying that a de-escalation would send
oil prices much lower as supply concerns would ease, while a re-escalation
would likely trigger another surge that could quickly push WTI oil back above
$100.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) probed below
the support zone around the 93.00 level yesterday but eventually rose back
above it. The buyers will likely continue to step in around the support with a
defined risk below it to position for a rally back into the 105.00 resistance.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the lower bound of the channel around the 85.00
level.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we
have a downward trendline defining the bearish momentum. If we get a pullback,
we can expect the sellers to lean on the trendline with a defined risk above it
to keep pushing into new lows. The buyers, on the other hand, will want to see
the price breaking higher to increase the bullish bets into the 105.00 resistance.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline defining the current pullback. The buyers will
likely continue to lean on the trendline with a defined risk below it to keep
pushing into the 4-hour trendline. The sellers, on the other hand, will look
for a break lower to pile in for a drop into new lows. The red lines define the
average daily range for today.
UPCOMING CATALYSTS
Today, we have Trump meeting
with Gulf leaders and potentially with Iran’s President at the UN General
Assembly. Tomorrow, we get the Flash US PMIs. On Thursday, we have the Trump-Xi
meeting.
This article was written by Giuseppe Dellamotta at investinglive.com.