Crude oil has been consolidating around recent lows as the US-Iran uncertainty
keeps traders guessing on the next move.
The US-Iran conflict remains the main driver of course, with diplomatic
efforts showing some signs of progress but no concrete breakthrough yet.
Oil prices dipped yesterday after the Wall Street Journal reported that the US Vice President Vance was
considering face-to-face talks with a top Iranian security official in an
effort to end the war.
However, significant mistrust remains, with Iranian officials accusing
Washington of preparing further military strikes or tighter economic pressure.
Iran has also continued to issue warnings of retaliation against US military
bases and reportedly targeted ship navigation systems near the Strait of
Hormuz.
Meanwhile, the US military says its blockade has prevented Iran from
exporting oil, while US forces are working to keep the Strait open to
commercial shipping. The conflicting signals leave the outlook highly
uncertain, with oil prices remaining sensitive to any developments that could
either pave the way for de-escalation or trigger another escalation.
It goes without saying that a concrete breakthrough would trigger a
significant selloff and take oil prices back to pre-war levels relatively
quickly. But an escalation, on the other hand, could trigger another rally on a
rising risk premium, although there’s also a chance that it could be
short-lived if Trump launches limited strikes just to save face before exiting
the war.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) is consolidating
around the key 87.00 handle. The choppy price action amid the US-Iran
uncertainty makes it hard for both sides to pick a direction. The buyers will want
to see the price rising above the 87.00 handle to start positioning into new
highs, while the sellers will continue to pile in for new lows below the 87.00
level.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, there’s
not much we can glean from this timeframe given the choppy price action around
the 87.00 level, so we need to zoom in to see some more details.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor downward trendline defining the bearish structure. We can expect
the sellers to continue to lean on the trendline, with a defined risk above it,
to keep targeting the 80.00 handle next. The buyers, on the other hand, will want
to see the price breaking higher to pile in for a rally into the 110.00
resistance, with the 92.50 level as the first target. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the latest US
Jobless Claims figures. Tomorrow, we conclude the week with the US PPI data.
The focus will remain on US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.