Oil prices consolidate around recent highs amid renewed US-Iran attacks as traffic in the Strait of Hormuz comes to a halt
FUNDAMENTAL
OVERVIEW
Oil prices remain skewed to the upside in the short-term
as the renewed US-Iran escalation increased the geopolitical risk premium. Given
the intensification of military strikes in recent days, the traffic
in the Strait of Hormuz came to a halt.
After roughly seeing traffic of around 30-40 vessels
transit through the strait in recent weeks, that figure has dropped
dramatically since Friday to just 6 vessels on Sunday.
The good news is that Iranian mediators are said to be
continuing negotiations to remedy the situation, even amid the US attacks. Nevertheless,
without a clear de-escalation, the downside in oil prices will remain limited.
Tomorrow, we have also the US CPI report which could influence oil prices through
demand expectations. In fact, hotter than expected data will likely trigger a
hawkish repricing in interest rate expectations and weigh on oil prices due to
negative growth outlook. On the other hand, soft inflation figures could support
crude oil on easing Fed tightening risk.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil is approaching the key resistance zone around the 78.00
level. If the price gets there, we can expect the sellers to step in with a defined
risk above the resistance to position for a drop back into the 68.00 support
targeting a break. The buyers, on the other hand, will want to see the price
breaking higher to increase the bullish bets into the major trendline around the
90.00 handle.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see that we also have a downward trendline adding confluence to the 78.00 resistance
which makes it technically stronger. There’s not much else we can glean from this
timeframe as the sellers will have a better risk to reward setup around the
78.00 resistance, while the buyers will need a breakout to open the door for
new highs.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor support zone around the 72.50 level where the price got rejected
from several times in the past days. The buyers will likely step in around the
support with a defined risk below it to keep pushing into new highs. The
sellers, on the other hand, will look for a break lower to increase the bearish
bets into the 68.00 support next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we have Fed’s
Waller speaking on the Economic Outlook which could offer some further information
on their reaction function. Tomorrow, we get the US CPI report and Fed Chair
Warsh testimony. On Wednesday, we have the US PPI report. On Thursday, we get
the US Retail Sales and Jobless Claims data. On Friday, we conclude the week
with the University of Michigan Consumer Sentiment survey. US-Iran headlines
will also influence the price action.
This article was written by flfeaa2662d774455a8d50fa77b791ed5f at investinglive.com.