FUNDAMENTAL
OVERVIEW
Oil has been slowly edging lower amid expectations of
a potential de-escalation. The initial leg lower was triggered by Saudi Arabia
saying that it was seeking to restore about half the capacity of its East-West
pipeline within days and to bring it back to full capacity in about six weeks.
US Energy Secretary Wright later confirmed that flows through the pipeline
could resume within days.
The upside in oil also remained capped by a few
de-escalatory headlines, such as China privately asking Iran to use its
influence over the Houthis to help contain the group’s military campaign
against Saudi Arabia, as well as hopes for a broader de-escalation after the UN
General Assembly, where Trump is expected to meet with Gulf leaders to discuss
the next steps in the war with Iran and will also likely meet Iranian
officials.
Iranian President Pezeshkian is expected to attend the
Assembly after the US agreed to allow an Iranian delegation into the United
States for the gathering. Trump has signalled his openness to meeting with the
Iranian President.
A de-escalation would send oil prices lower on easing
supply concerns, while further escalation would likely trigger another surge
that could quickly take WTI oil above the $100 level and even send it to its
highest levels since March.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) is bouncing from
the support zone around the 93.00 level. Keep in mind that the gap lower on WTI was due to the futures rollover and not because of a fundamental catalyst. The
buyers will likely continue to step in around the support with a defined risk
below it to position for a rally back into the 105.00 resistance. The sellers,
on the other hand, will want to see the price breaking lower to increase the
bearish bets into the lower bound of the channel around the 85.00 level.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we
have a downward trendline defining the bearish momentum. 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 want to see
the price breaking higher to increase the bullish bets into the 105.00 resistance.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the 93.00 support and the downward trendline remain
the two key technical levels to watch. The sellers will look for a break below
the support or a rejection around the trendline to position for new lows, while
the buyers will look for a bounce on the support or a break above the trendline
to keep pushing into new highs. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we have Trump meeting
with Gulf leaders and potentially with Iran’s President at the UN General
Assembly. On Wednesday, we get the Flash US PMIs. On Thursday, we have the
Trump-Xi meeting.
This article was written by Giuseppe Dellamotta at investinglive.com.