FUNDAMENTAL
OVERVIEW
Crude oil is
surging again as the risk of renewed US military action against Iran increases.
Reports that the White House has asked the Pentagon to develop options for
strikes against Iranian targets, potentially before the US midterm elections,
have raised concerns that the recent period of relative de-escalation could be
coming to an end.
The Pentagon has
also reportedly instructed US Central Command (CENTCOM) to complete
preparations for potentially resuming major combat operations. While no final
decision has been made, the possibility of strikes on Iranian infrastructure,
combined with the risk of retaliation against US or Gulf targets, is prompting
markets to price a higher probability of disruptions.
Even without an
actual disruption to production or shipments, traders are pricing the
possibility that an escalation could threaten Gulf energy infrastructure or
shipping through the Strait of Hormuz.
The key risk for
markets is what happens next. A de-escalation could quickly unwind part of the
risk premium and push oil prices lower, while a prolonged standoff or direct
military confrontation could keep the premium elevated and potentially drive
oil significantly higher.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) rebounded from
the lower bound of the channel and extended the gains as the buyers piled in to
position for a rally into the 110.00 resistance. If we get another pullback
into the bottom trendline, we can expect the buyers to step in again, with a
defined risk below the channel, to keep targeting the 110.00 resistance. The
sellers, on the other hand, will want to see the price breaking lower to pile
in for a drop into the 68.00 support next, with the 80.00 level as the first
target.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price broke above the downward trendline and the momentum picked up as the
buyers increased the bullish bets into the 96.77 level. If the price gets
there, we can expect the sellers to step in, with a defined risk above the
level, to position for a drop back into the lower bound of the channel. The
buyers, on the other hand, will look for a break higher to increase the bullish
bets into the 110.00 resistance.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline defining the current momentum that could act as
support in case of a pullback. The buyers will likely lean on the trendline,
with a defined risk below it, to keep pushing into new highs, while the sellers
will look for a break to start positioning for a break below lower bound of the
channel. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
get the latest US Jobless Claims figures. Tomorrow, we conclude the week with
the University of Michigan Consumer Sentiment survey. The focus, though,
remains on the Middle East developments.
This article was written by Giuseppe Dellamotta at investinglive.com.