Crude oil is consolidating around recent highs as the fears of imminent US
attacks on Iran eased. Nevertheless, the market remains supported amid
persistent escalation risk given the prolonged stalemate in negotiations.
Moreover, the talks between Saudi Arabia and Iran failed to produce any
meaningful breakthrough, with no agreement announced to halt Houthi attacks or
de-escalate the Saudi-Houthi conflict.
Meanwhile, the Houthis yesterday targeted the Saudi’s East-West oil
pipeline pumping stations and Riyadh airport. As a reminder, the East-West
pipeline is a critical alternative export route and disruptions in September
contributed to a surge in oil prices.
Looking ahead, oil prices will remain supported amid the tensions in the
Middle East and the prospects of another US attack. A de-escalation in the
Saudi-Houthi conflict or a surprising breakthrough in US-Iran negotiations, on
the other hand, should lead to a big correction.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil (CFD contract) is
consolidating around recent highs. There’s not much we can glean from this
timeframe as the most important levels remain the lower bound of the channel
and the resistance around the 110.00 level, so we need to zoom in to see some
more details.
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, we
have a minor downward trendline defining the current pullback. The sellers will
likely continue to lean on the trendline, with a defined risk above it, to keep
targeting a break below the upward trendline. The buyers, on the other hand,
will want to see the price breaking higher to increase the bullish bets into
the 110.00 resistance. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US Consumer Confidence report. Tomorrow, we
have the FOMC rate decision. On Thursday, we get the US GDP report, the US PCE
and the latest US Jobless Claims figures. On Friday, we conclude the week with
the US Employment Cost Index. The focus will remain on the Middle East
developments.
This article was written by Giuseppe Dellamotta at investinglive.com.
