Crude oil
continues to edge higher amid lack of improvements in the Middle East. As a reminder,
the Saudi
Arabia-Houthis conflict has intensified recently with the Houthis attacking
many Saudi targets, including Riyadh’s international airport and the Aramco
headquarters complex in Dhahran.
They have
threatened further attacks on airports and energy infrastructure, while
Saudi-backed forces are fighting the Houthis inside Yemen.
Commercial
shipping through the Strait of Hormuz continues to be disrupted. Two
vessels sank recently after being hit by Iranian forces . Iran’s leadership
said it will continue fighting until the US accepts its demands.
Finally, Reuters
reported today that, according to CNN, the US
military has developed contingency plans that could include using the MOAB bomb (the largest non-nuclear bomb) against Iranian energy infrastructure or nuclear-related sites if Trump orders
renewed combat operations.
Reuters added it
could not independently verify the report, and this is just contingency
planning, not confirmation that the bomb will be used.
Looking ahead, the
focus will remain on the Middle East developments. Oil prices will likely
continue to be supported until we get a de-escalation or a breakthrough in
US-Iran negotiations. I would also start paying attention to the growth outlook
as a deterioration and strong selloff in the stock market could weigh on oil
prices too.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil (CFD contract) continues to rise
steadily given the lack of improvements in the Middle East. If the price pulls
back into the lower bound of the channel again, we can expect the buyers to
step in, with a defined risk below the channel, to position for a rally into
the 110.00 resistance. The sellers, on the other hand, will look for a break
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 have
a minor upward trendline defining the bullish momentum. The buyers will likely
continue 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 extend the pullback into the lower bound of the channel, targeting a
break below it.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can
see the price is approaching the 96.77 level. We can expect the sellers to step
in around the 96.77 level, with a defined risk above it, to position for a drop
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. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US PPI, the
US Retail Sales and the latest US Jobless Claims figures. We have also Fed
Chair Warsh speaking very late in the day in a fireside chat with IMF Managing
Director Georgieva. The focus, though, will remain on the Middle East developments.
This article was written by Giuseppe Dellamotta at investinglive.com.
