Crude oil pulled
back in the final part of last week after Trump ruled out strikes on Iran
before the November elections and added that they’ve been having productive
discussions.
Over the weekend, Iran said that the US’s
response to its proposal to reopen the Strait of Hormuz was insufficient. The
negotiations to resolve the difference are still ongoing and Iran’s Foreign
Ministry Spokesperson said today that Tehran is still reviewing US positions
and will reply via intermediaries when the review is over.
Trump also claimed
on Sunday that Russia and Ukraine agreed to an energy ceasefire and will halt
attacks on each other’s energy facilities. According to Axios, Trump made a
similar announcement last month, but neither party confirmed that there was a
deal and both Russia and Ukraine continued attacking energy infrastructure.
Ukraine’s
President Zelenskiy said this morning that Russia committed breaches of the energy
ceasefire announced by Trump but added that they are waiting for details of
talks between US and Russia.
The efforts to
increase Russian diesel exports to the US could help ease concerns about fuel
availability, but they will not resolve the shortage of crude flows through
Hormuz.
Looking ahead, the focus will remain mainly on US-Iran negotiations,
although a de-escalation in the Saudi-Houthi and Russian-Ukraine attacks could
also limit the rise in crude prices. A breakthrough in negotiations and the
reopening of the Strait of Hormuz, would lead to a major selloff in oil prices
on expected supply improvement, while a negative outcome wouldn’t change much
at this point, although it would limit the downside in crude.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil (CFD contract) has been
rising pretty steadily after bouncing on the lower bound of the channel, as the
buyers stepped in to target a rally into the 110.00 resistance. If the price
pulls back to the lower bound of the channel again, we can expect the buyers to
step in, with a defined risk below the channel, to keep targeting the 110.00
resistance. The sellers, on the other hand, will want to see the price breaking
lower to pile in for a drop into the 68.00 support next, with the 80.00 level
as the first target.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see that the break of the downward trendline opened the door for a rally into
the 96.77 level. If the price gets there, we can expect the sellers to step in,
with a defined risk above the level, to position for a drop back into the lower
bound of the channel. The buyers, on the other hand, will look for a break
higher to increase the bullish bets into the 110.00 resistance next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can
see the price pulled back into the minor upward trendline and bounced, as the
buyers stepped in to keep pushing into the 96.77 resistance. This morning, the
price broke above the downward counter-trendline. The buyers increased the
bullish bets into the 96.77 resistance on the breakout. The sellers will want to
see the price falling back below the counter-trendline to target a pullback
into the upward trendline, where the buyers will likely step in again to keep
pushing into new highs. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On
Wednesday we have the US CPI report. On Thursday, we get the US PPI, the US
Retail Sales and the latest US Jobless Claims figures. The focus, though, will
remain on US-Iran negotiations.
This article was written by Giuseppe Dellamotta at investinglive.com.
