FUNDAMENTAL OVERVIEW
Oil prices dived today after Trump announced on Truth Social a two-sided ceasefire agreement for two weeks while the US and Iran negotiate a lasting peace deal. The ceasefire included the reopening of the Strait of Hormuz as condition. The discussions will begin on Friday in Islamabad and may be extended if both parties agree.
There’s still a risk that the war could restart any time as the US and Iran haven’t officially ended the hostilities. Nonetheless, the bias has now turned bearish for crude oil given Iran’s acceptance of the ceasefire despite being against it for a long time. This will likely keep expectations positive for the negotiations.
It goes without saying that if the negotiations fail and the conflict resumes, oil prices will quickly rise back to pre-ceasefire levels and might even extend into new highs.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil plummeted into the 93.00 support zone before pulling back a bit. That’s where the buyers stepped back in with a defined risk below the support to position for a rally into new highs. The sellers, on the other hand, will look for a break to increase the bearish bets into new lows.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see the price rejected several times the upper bound of the channel and eventually dropped quickly to the bottom trendline following the ceasefire announcement. Again, we can expect the buyers to step in around the support and the lower bound of the channel to position for a rally back into the top trendline, while the sellers will look for a break lower to extend the drop into new lows.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see the price is trading at the lower bound of the average daily range for today. In such instances, we can generally see some consolidation or a pullback before the next move.
UPCOMING CATALYSTS
Tomorrow we get the US PCE price index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US CPI report and the University of Michigan Consumer Sentiment survey. As a reminder, we have also the US-Iran negotiations in Islamabad on Friday.
