FUNDAMENTAL
OVERVIEW
Oil prices came under some renewed pressure in the final part of last week
on hopes that Iran would accept the US war-ending proposal after Axios reported
the two parties were getting close to a one-page memo and that US officials
were expecting Iran’s response to several key points in the following 48 hours.
That was preceded by Trump pausing Project Freedom which was interpreted as
another step towards a deal. Moreover, Israeli PM Netanyahu confirmed that the removal
of Iranian nuclear material remains an active war priority, and separate
reports indicated that Trump told Netanyahu directly he wants to go in on
Iranian nuclear sites.
This kind of headline noise has been going on for several weeks and kept
the market in rangebound mode as traders continued to wait for new
developments before picking a direction. The unlimited ceasefire is acting as a
ceiling for oil on hopes of an eventual end. The tensions and lack of
breakthrough though are acting as a floor on risks that things could escalate
any time.
The reopening of the Strait should take oil
prices back to pre-war levels, but if the war were to restart, we can expect prices to
spike into new cycle highs.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil probed below the 93.00 support zone last week but couldn’t
extend the breakout. Overall, the price action remains mostly rangebound with
bouts of volatility coming from US-Iran headlines. This is unlikely to change
until we get a real breakthrough or the restart of the war.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a downward trendline defining the resent bearish momentum. The sellers stepped
in around the trendline with a defined risk above it to position for a drop
into new lows. The buyers, on the other hand, will want to see the price
breaking higher to pile in for a rally into the 112.00 handle next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, the recent
price action might have formed a bearish flag, but we will need a break below
the bottom trendline to confirm it. For now, we can expect the sellers to pile
in around the top trendline to position for a pullback into the 93.00 support
targeting a breakout.
The buyers, on the other
hand, will either wait for a better risk to reward setup around the bottom
trendline and the support or a break above the major downward trendline to
position for a rally into the 112.00 level next. On Wednesday, we have the US PPI data. On
Thursday, we get the US Retail Sales report and the latest US Jobless Claims
figures
