FUNDAMENTAL OVERVIEW
We saw a classic “sell the fact” reaction last week after the G7 economies and the IEA agreed to release a record 400 million barrels of oil from strategic reserves. Despite that, oil prices climbed back into triple-digit territory as hopes for a quick end to the war faded and disruptions in the Strait of Hormuz continued.
Trump is now pushing for military escorts in the Strait and urging other nations to join the effort. So far, no country has signed on that as nobody wants to get directly involved in the conflict. Even if they did, it’s unlikely that oil prices would drop much.
Trump reiterated yesterday that oil prices would “drop like a rock” once the war ends, and he’s absolutely right. The key issue, though, is the timing. When pressed on that, he remained vague, as usual, but admitted it’s not happening this week.
Until we see real de-escalation, the path of least resistance for oil prices is still to the upside, with limited room for a meaningful correction.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil is consolidating between the 93.00 support and the 100.00 handle. 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 more clearly the consolidation between the 93.00 support and the 100.00 handle. The buyers will likely continue to step in around the support with a defined risk below it to keep pushing into new highs, while the sellers will look for a break lower to pile in for a drop back into the 80.00 handle next.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor downward trendline defining the recent pullback into the support. The sellers will likely continue to lean on the trendline with a defined risk above it to keep pushing into new lows, while the buyers will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we have the US PPI report and the FOMC policy decision. On Thursday, we get the latest US Jobless Claims figures. The focus remains on the US-Iran war, so keep an eye on the headlines, especially those regarding the Strait of Hormuz.
