FUNDAMENTAL
OVERVIEW
Oil prices rose again on Friday following reports
of Iran’s ballistic missile launches. Iranian forces recently said they
were going to switch from defensive tactics to launching pre-emptive strikes
against US military assets across the Middle East.
The increase in the risk premium has kept oil prices
supported, as intensifying US-Iran strikes in the Strait of Hormuz have fuelled
fears of prolonged supply disruptions.
In other news, OPEC+
kept October oil output unchanged over the weekend as disruptions in the
Strait of Hormuz have reduced the group’s ability to influence physical oil
supply and prices. The oil market has been driven solely by US-Iran war news.
The key question now is whether this is just another
temporary flare-up or a prolonged war. Trump mentioned that the recent military
campaign against Iran would not continue for “too long”, so I would
wait for signs of de-escalation to start positioning for lower prices.
If things escalate further, then we might see WTI oil
breaking above the July high and start eyeing the $100 mark again.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil is consolidating near the July high around the 93.50 level. That’s
where the sellers continue to step in with a defined risk above the resistance
to position for a drop into the major upward trendline. The buyers, on the
other hand, are waiting for a break higher to extend the rally into the 97.00
handle next.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we
have a minor support zone around the 89.00 handle that defines the 89.00-93.50
range. Market participants will likely continue to play the range by buying at
support and selling at resistance until we get a breakout on either side.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as from a risk management perspective, the buyers will
have a better risk to reward setup around the 89.00 support or the major trendline,
while the sellers will continue to pile in around the 93.50 resistance or wait
for the break below the 89.00 support. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On Thursday, we get the
US PPI report and the US Jobless Claims figures. On Friday, we conclude the
week with the US CPI report. The focus will remain on US-Iran strikes.
This article was written by Giuseppe Dellamotta at investinglive.com.