Crude oil whipsawed yesterday
on some positive but conflicting reports around the ongoing US-Iran negotiations.
Al-Arabiya reported that Qatar and Pakistan
presented a “compromise proposal” that met the demands of both the
American and Iranian sides. The new proposal also included partial response to
Iran’s frozen funds demand.
Oil prices sold off initially as expectations of
an imminent deal grew stronger but then reversed after a diplomat involved in
US-Iran talks said that negotiations continue and that reports of a deal being
close were wrong.
If we do get a breakthrough, we can expect crude
oil to sell off hard on expectations of improved energy supply amid the
reopening of the Strait of Hormuz. A prolonged stalemate, though, should keep
the market supported.
Meanwhile, the Saudi-Houthi
conflict continues. The attacks intensified sharply recently and have been an
important driver of higher oil prices in the past couple of weeks. Iran said
yesterday that it has not received a response from Saudi Arabia or the Houthis
to its offer to help broker talks to end the fighting. A de-escalation on this
front would also help bringing oil prices lower in the short-term, potentially
erasing October’s gains.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil (CFD contract) is now
consolidating above the 96.77 level as positive US-Iran negotiations headlines limit
the bullish momentum. The buyers will likely continue to pile in around these
levels, with a defined risk below the 96.77 level, to keep targeting the 110.00
resistance. If the price gets there, we can expect the sellers to step in, with
a defined risk above the resistance, to position for a drop back into the lower
bound of the channel.
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 drop into the lower bound of the channel.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers will continue to have a better risk to
reward setup around the trendline, while the sellers will need a break below
the trendline and the 96.77 level to target a deeper pullback into the lower
bound of the channel. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On
Thursday we get the latest US Jobless Claims figures, while on Friday we
conclude the week with the US Flash PMIs. The focus will remain on US-Iran negotiations.
This article was written by Giuseppe Dellamotta at investinglive.com.
