FUNDAMENTAL OVERVIEW
Crude oil continues to consolidate between key technical levels as traders await new developments from the US-Iran negotiations. Yesterday, Iran’s atomic energy chief said that Iran would be open to dilute its highly enriched uranium if the United States lifted all sanctions.
The rangebound price action is clearly showing indecision in the market as the focus remains on the geopolitical risk. Nonetheless, the macro backdrop has also been supporting higher oil prices.
In fact, OPEC+ continues to hold output steady, and demand is expected to improve as last year’s uncertainty fades. This should continue to support the oil market unless we get more output hikes or the market starts to bet on Fed’s rate hikes.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil is consolidating between the 66.43 and 62.35 levels as negotiations between US and Iran continue. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see an upward trendline defining the bullish momentum. The recent price action has also formed what looks like a symmetrical triangle. This is a neutral pattern, and the price can break out on either side. The buyers will likely continue to lean on the upward trendline to keep pushing into new highs, while the sellers will keep on stepping in around the downward trendline to target a breakout to the downside.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see more clearly the choppy price action with no clear levels where to lean on other than the trendlines. There’s not much we can add here as the buyers will continue to lean on the upward trendline and wait for a breakout to the upside, while the sellers will keep on stepping in around the downward trendline and increase the bearish bets on a downside breakout. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US December Retail Sales and the US Employment Cost Index data. Tomorrow, we have the US NFP report. On Thursday, we get the US Jobless Claims figures. On Friday, we conclude the week with the US CPI report.
