FUNDAMENTAL
OVERVIEW
Crude oil has been
under pressure at the start of last week as expectations of a
de-escalation and an earlier end to the conflict increased going into the UN
General Assembly.
However, those expectations started to fade when
Trump reiterated that the US would make a deal with Iran after the November
elections. His remarks reduced optimism over a near-term resolution and
contributed to a renewed rise in oil prices.
Going into the weekend, the hopes for a US-Iran
deal returned after Iran sent a proposal to reopen the Strait of Hormuz within
seven days on certain conditions. Unfortunately, Trump rejected the proposal on Saturday and told reporters that he expected
to resume bombing Iran after the midterms.
Unsurprisingly, oil opened the week higher and
extended the gains as IRNA news reported that there is no plan for a new round
of negotiations with the American side on the agenda and the Minister of
Foreign Affairs will return to Tehran on Tuesday.
Looking ahead, it goes without saying that a breakthrough in
negotiations would send oil prices quickly lower, while a prolonged stalemate
or even a re-escalation will keep the market supported into new highs.
Keep in mind that Trump is facing many constraints at
the moment, so an end to the war is more likely than not. The only question is
the timeline and that’s what’s been driving the price action recently.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) rose back
above the major 93.00 zone as hopes for a quick US-Iran deal faded. The buyers piled
in, with a defined risk below the zone, 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 93.00 zone to target a drop into the lower bound of the channel
around the 85.00 handle.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, the
price will likely make a new higher high in the next few days, so we should
have the upward trendline then defining the bullish momentum. If we eventually
get a pullback into the trendline, we can expect the buyers to lean on it, with
a defined risk below it, to keep pushing into the 110.00 resistance. The
sellers, on the other hand, will look for a break below the trendline to pile
in for a drop into the lower bound of the channel.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have
another minor trendline defining the bullish momentum on this timeframe. The
buyers will likely continue to lean on the trendline, with a defined risk below
it, to keep targeting new highs. The sellers, on the other hand, will look for
a break lower to extend the pullback into the 4-hour trendline. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we get the US
Consumer Confidence report and the US Job Openings data. On Wednesday, we have
the US ADP and the US PCE price index. On Thursday, 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 Middle
East developments.
This article was written by Giuseppe Dellamotta at investinglive.com.