Crude oil jumped yesterday after Trump stated on Truth Social that the US
does not need a deal with Iran, fuelling escalation concerns.
Trump warned that the US would not hesitate to take further military action
if current measures fail to achieve objectives, while CENTCOM is implementing
the naval blockade and working to restore commercial shipping through the
Strait of Hormuz.
The reported US airstrikes on Sirik, followed by Iranian claims of
retaliatory attacks against US radar infrastructure in Bahrain, show that the
situation is becoming increasingly fragile.
Iran warned that any country directly or indirectly participating in
actions against its interests will be considered hostile and held responsible
for the consequences.
Moreover, there were reports of the Houthis attacking again Saudi energy
infrastructure, including the East-West pipeline and Yanbu oil facility. The Saudi-Houthi
conflict adds another layer of risk to energy disruptions, but the US-Iran
standoff remains the main driver.
It goes without saying that a breakthrough in US-Iran negotiations would
trigger a significant selloff and take oil prices back to pre-war levels
relatively quickly. But as of now, this scenario looks much less probable.
An escalation or a prolonged stalemate should keep oil prices supported,
although there’s also a chance that Trump decides to proceed with limited
strikes against Iran’s nuclear facilities before exiting the war.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) jumped
yesterday after Trump stated that the US doesn’t need a deal with Iran. The
buyers piled in as the price rose above the 87.00 handle to position for a
rally into the 110.00 resistance. The sellers, on the other hand, will want to
see the price falling back below the 87.00 level to extend the drop into the
80.00 handle next.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we now
have an upward trendline defining the bullish momentum. If we get a pullback,
we can expect the buyers to lean on the trendline, with a defined risk below it,
to keep pushing into the 110.00 resistance, with the 92.50 level as the first
target. The sellers, on the other
hand, will look for a break lower to pile in for a drop into the 80.00 handle
next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers piled in already on the break of the
downward trendline, and for the next opportunity we will likely need a pullback
into the upward trendline. The sellers, on the other hand, will want to see the
price coming into the 92.50 level or breaking below the upward trendline to position
for new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
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.