FUNDAMENTAL
OVERVIEW
Crude oil has come
under renewed pressure as additional US-Iran talks helped ease the tensions.
Both sides are still engaged in negotiations to amend Iran’s recent proposal to
reopen the Strait of Hormuz within seven days under certain conditions. The
disagreement now reportedly centres on the sequencing of the steps rather than
the components of the plan.
Iran’s government
spokesperson said that the Foreign Minister Araghchi presented to the cabinet
“a US proposal” today. No further details were given, though. Traders
will therefore keep a close eye on the headlines for more information.
In terms of immediate
catalysts, yesterday the US
offered up to 40 million barrels from the strategic oil reserve (SPR) and
triggered a quick dip in oil prices. Moreover, we saw some downside on the news
that Trump
was in favour of easing sanctions on Russia in exchange for political prisoners.
The news mattered
for the oil market because prospects of easing restrictions on Russia could
eventually put more Russian crude onto global markets, improving oil supply.
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 approaching
the lower bound of the channel around the 87.00 level. If the price gets there,
we can expect the buyers to step in, with a defined risk below it, to position for
a rally into the 110.00 resistance. The sellers, on the other hand, will want
to see the price breaking lower to increase the bearish bets into the 80.00
handle next.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we
have a minor downward trendline defining the recent bearish move. If we get a
pullback, we can expect the sellers to lean on the trendline, with a defined
risk above it, to keep pushing into new lows. The buyers, on the other hand,
will look for a break higher to extend the pullback into the 96.00 handle next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here, but we can see that there’s a strong resistance
around the 91.50 level where we have also the trendline for confluence. Again, that’s
where we can expect the sellers to step in to position for new lows, while the
buyers will look for a break higher to extend the pullback into the 96.00 handle
next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
have the US ADP and the US PCE price index. Tomorrow, we get the US ISM
Manufacturing PMI and the latest US Jobless Claims figures. On Friday, we
conclude the week with the US NFP report. The focus, though, will remain on
US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.