FUNDAMENTAL OVERVIEW
Oil prices continue to fall steadily after the end of the US-Iran war and the reopening of the Strait of Hormuz. The war related gains should be erased soon with the price approaching the pre-war levels around the 68.00-69.00 area.
The bearish bias remains intact as traders continue to price out the war premium and price in the increase in supply in the next months. Another bearish driver is the Fed’s tightening risk as that’s going to weigh on the demand side.
In the short-term, upside risks include peace between the US and Iran breaking down again and the Strait of Hormuz getting shut or US inflation data surprising to the downside and leading to a dovish repricing.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil continues to target the pre-war levels around the 68.00 handle. If the price gets there, we can expect the buyers to step in with a defined risk below the support to position for a rally back into the 78.00 resistance. The sellers, on the other hand, will look for a break to increase the bearish bets into the 55.00 handle next.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see the price is trading right in middle of the two key zones. From a risk management perspective, the sellers will have a better risk to reward setup around the 78.00 resistance to position for new lows. The buyers, on the other hand, should wait for the price to reach the pre-war levels or break above the 78.00 resistance to position for new highs.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor resistance zone around the 75.00 handle where the price got rejected from several times in the past days. If we get a pullback, we can expect the sellers to step in around the resistance with a defined risk above it to keep pushing into new lows. The buyers, on the other hand, will look for a break to extend the pullback into the 78.00 resistance next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we get the US Jobless Claims data and the US PCE report. On Friday, we conclude the week with the final University of Michigan consumer sentiment survey.
