WTI crude is now down over 4% on the day, accelerating a drop after yesterday’s dive lower. The drop yesterday was somewhat arrested near the 100-day moving average (red line). But now, we’re seeing a firm break below that and could point to further declines in oil prices after the earlier headlines.
Of note, we’re seeing price action also break out of its triangle/wedge/flag pattern and that’s something that could give sellers added momentum in chasing price to the downside.
It will mark the first time since January that oil prices drop back below either of its key daily moving averages. So, that’s an important momentum shift in terms of how the price bias is trading right now.
The next key support line will be the $80 mark on any further drop from hereon.
The reaction comes as Iran reveals the details of the deal/memorandum of understanding that it is looking to agree to with the US.
At first glance, the details don’t look to be too encouraging as it reveals that Iran has called the US to lift sanctions and also lift its naval blockade. Those are two things that Trump has previously said that they simply will not do until Iran themselves keep their promise on nuclear arrangements.
But if we’re now hiding behind “commitments” to act in the future while moving forward with a deal to negotiate first, then I guess it’s just a matter of semantics now isn’t it?
In essence, Trump has compromised on his previous positions and opened the door for Iran as well. Taking the L is perhaps the best thing Trump can do for his own image back home at this stage honestly. But even if we do know that, expect him to frame it all as a W as always.
In the big picture though, it remains to be seen if this deal/memorandum of understanding can hold up for the next 60 days
