FUNDAMENTAL
OVERVIEW
Crude oil has been
stuck in a consolidation recently as the market turned its focus to US-Iran negotiations,
awaiting some new development.
The good news is
that since the UN General Assembly, there’s been a de-escalation in direct US-Iran
confrontation, although attacks on vessels in the Strait of Hormuz persist as
Iran defends its blockade.
Iranian Parliament
Speaker Ghalibaf reiterated over the weekend that the Strait of Hormuz will not
reopen until the Iranian conditions are fulfilled. Tehran said it has received
a US response through mediators but that additional points still need to be
communicated.
Iran’s Foreign
Minister Araghchi confirmed that Tehran remains serious about diplomacy but
warned that Iran is prepared to respond militarily if the US resumes attacks.
This morning, the
AFP reported that the Saudi East-West pipeline was halted after new attacks. The
news triggered some upside in oil prices but some of those gains were pared
back after further reports said that the oil pipeline is flowing as normal.
Looking ahead, it goes without saying that a breakthrough in US-Iran negotiations would
send oil prices quickly lower, while a prolonged stalemate or even a
re-escalation will keep the market supported into new highs.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) is
consolidating near the lower bound of the channel. We can expect the buyers to continue
to step in around the bottom trendline, with a defined risk below it, to
position for a rally into the 110.00 resistance. The sellers, on the other
hand, will look for a break lower to pile in for a drop into the 68.00 support
next, with the 80.00 handle as the first target.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see more clearly the recent rangebound price action as traders turned their
focus to US-Iran negotiations, awaiting new developments. From a risk management
perspective, the buyers will continue to have a better risk to reward setup around
the 88.00 level to keep targeting new highs, while the sellers will need to
wait for a break below the lower bound of the channel to open the door for new
lows.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, with
the new lower low created on Friday, we might now have a downward trendline acting
as resistance. If the price rallies into the trendline, we can expect the
sellers to lean on it, with a defined risk below it, to position for a drop
into the lower bound of the channel. The buyers, on the other hand, will want
to see the price breaking higher to pile in for a rally into the 96.77 level
next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe get
the US ISM Services PMI. On Wednesday, we have the FOMC meeting minutes. On
Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude
the week with the University of Michigan Consumer Sentiment survey. The US-Iran
developments, though, will be the main focus.
This article was written by Giuseppe Dellamotta at investinglive.com.