FUNDAMENTAL OVERVIEW
Oil prices jumped above 100$ per barrel today after Israel bombed 30 Iranian fuel depots on Saturday and the market feared that the conflict could extend beyond what was previously expected.
The momentum picked up already on Friday after Qatar’s Energy Minister warned that prices could surge to 150$ on a prolonged war. The path of least resistance remains to the upside amid the war and the virtually closed Strait of Hormuz.
Traders are now laser focused on de-escalation as that would trigger a massive selloff in oil prices. Trump said on Truth Social today that oil prices will drop rapidly when the destruction of the Iran nuclear threat is over. Reading between the lines, it looks like we are reaching Trump's pain threshold given the triple digit oil prices and weakening stock markets.
What a de-escalation could look like though? It could be Trump saying that the nuclear threat is over or that they reached all their goals in their military operation. That would mark the start of de-escalation, and the market will react to it quickly.
For now, they are trying to stop the momentum and stabilise prices with short-term actions like the release of emergency oil reserves. In fact, the news of G7 countries mulling coordination with IEA to release emergency oil reserves led to a quick drop in oil this morning which is now trading near the opening gap.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil opened higher today and extended the gains into the 119.00 handle before pulling back. We can expect the buyers to step in around the 95.00 area with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break to extend the pullback into the 80.00 region.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, there’s not much we can add as the buyers will look for a bounced around the 95.00 support zone, while the sellers will look for a break to extend the pullback into the minor upward trendline around the 82.00 level.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we don’t have other clear levels where to lean on except the 95.00 support zone and the 4-hour trendline. For now, the path of least resistance remains to the upside until we get a de-escalation. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On Wednesday we have the US CPI report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE price index, the University of Michigan Consumer Sentiment survey and the Job Openings data. As a reminder, the market focus right now is solely on the US-Iran war, so the data might not matter much.
