FUNDAMENTAL
OVERVIEW
Oil was slowly moving lower yesterday on some
potential profit-taking, but the losses were quickly erased after Saudi Arabia informed some European oil refiners that their September-loading Crude cargoes were cancelled after the East-West pipeline closure.
As a reminder, Saudi Arabia decided to shut its East-West pipeline after drone attacks. The pipeline has been an
alternative to the Strait of Hormuz, carrying roughly 4-5 million barrels per
day to the Red Sea in recent months. Its closure removed one of the few
available routes for Saudi crude exports while traffic through Hormuz remains disrupted.
The fundamental backdrop remains positive for oil prices,
and I expect that to continue unless there is meaningful progress in US-Iran
relations or a credible path toward reopening the Strait of Hormuz. The only
other solution to lower prices would be an aggressive Fed tightening cycle that
destroys demand and causes a recession.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oilprobed above the key
resistance zone around the 105.00 level but couldn’t sustain a breakout. The
sellers will likely continue to step in with a defined risk above the
resistance to position for a drop into the lower bound of the channel around
the 85.00 level. The buyers, on the other hand, will want to see the price
breaking higher to increase the bullish bets into the 111.00 handle next.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we
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 new highs. The sellers, on the other hand, will look for a
break lower to increase the bearish bets into the lower bound of the channel.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline defining the recent price action around the
resistance. Given the positive fundamental backdrop, the buyers will continue
to look for dip-buying opportunities around the trendlines. The sellers, on the
other hand, will look for breaks to pile in and target new lows. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
Today, we have the
FOMC rate decision. Tomorrow, we get the US Jobless Claims figures. Traders
will continue to keep a close eye on developments in the Middle East.
This article was written by Giuseppe Dellamotta at investinglive.com.