FUNDAMENTAL
OVERVIEW
Oil prices plunged yesterday
at the open following a couple of positive developments over the weekend. In fact,
a top Iranian security official said that a structure for negotiations with the
US was being set up and Trump confirmed later that Iran was seriously talking
to US.
Moreover, an Iranian
official stated that media reports of plans for revolutionary guards to hold
military exercise in the Strait of Hormuz were wrong. These events eased the
geopolitical risk premium and weighed on oil prices. Yesterday, it was
announced that US and Iran will hold talks in Istanbul on Friday.
Meanwhile, OPEC+
held output steady as expected over the weekend which is a good thing for
oil prices in the bigger picture as an improvement in demand without more
output hikes should support the market.
As mentioned
last week, it’s not just the US-Iran tensions supporting the oil market,
but there’s also the demand part. Yesterday’s US
ISM Manufacturing PMI beat expectations by a big margin and the new orders
index jumped to the best levels since 2022. Unless we get more output hikes
from OPEC+ or the market starts to bet on Fed’s rate hikes, oil prices will
likely remain supported.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
Crude oil – daily
On the daily chart, we can
see that crude oil eventually reached the 66.00 handle and pulled back as the
sellers stepped in to target new lows. The break below the 62.37 level saw more
sellers piling in to extend the drop into the 58.80 support. The buyers, on the
other hand, will either step in around the 58.80 support or wait for a break
above the 62.37 level again to position for a rally into new highs.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
Crude oil – 4 hour
On the 4 hour chart, we can
see that we have a trendline defining the bullish momentum. The buyers will
likely lean on the trendline with a defined risk below it to position for a
rally into new highs. The sellers, on the other hand, will look for a break
lower to increase the bearish bets into the 58.80 support next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
Crude oil – 1 hour
On the 1 hour chart, we can
see more clearly the recent price action with the consolidation between the
62.37 level and the trendline. The buyers will look for a break above the 62.37
level to increase the bullish bets into new highs, while the sellers will look
for a break below the trendline to extend the drop into new lows. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow the US ADP and the US ISM Services PMI. On Thursday, we get the US
Jobless Claims figures. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment data.
