FUNDAMENTAL OVERVIEW
Oil prices remain in triple digit territory amid the prolonged US-Iran stalemate and rising tensions in the Strait of Hormuz.
Yesterday, we got reports and denials about Iran firing on US ships in the Strait which brought some volatility. It looks like there were some warning shots but it's not clear what happened beyond that.
Trump said the US sank 6 Iranian fast boats while Iran denied it. Iran also launched a surprise attack against the UAE oil route that bypasses the Strait of Hormuz in Fujairah.
This latest escalation is likely to keep oil prices supported as the risk of another military confrontation increased. Trump has played things down for now, which is keeping the markets in check, but the situation could worsen quickly.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil extended the gains into the 110.00 level after the price broke above the key 93.00 resistance. The natural target for the buyers is the March high around the 120.00 level. From a risk management perspective, the buyers will have a better risk to reward setup around the 93.00 support to position for a rally into the 120.00 level. The sellers, on the other hand, will need a break below the support to open the door for a drop back into the next support around the 78.00 level.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have a minor resistance zone around the 107.00 level. If we get a pullback into it, we can expect the sellers to step in with a defined risk above it to extend the drop into the 93.00 support. The buyers, on the other hand, will look for a break to pile in for a rally into the 120.00 level next.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor upward trendline defining the current consolidation. The buyers will likely continue to lean on it to keep pushing into new highs, while the sellers will look for a break lower to pile in for a drop into the 93.00 support. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US ISM Services PMI and the US Job Openings data. Tomorrow, we have the US ADP report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report and University of Michigan Consumer Sentiment survey. It goes without saying that US-Iran headlines will continue to dominate the price action.
