Fundamental Overview
Crude oil has been falling steadily since topping around the $87.50 level following the mutual retaliations between Iran and Israel. The drop has been kind of a head-scratcher though as there are global growth expectations amid China and other major central banks policy easing, improving PMIs and OPEC+ extending the voluntary production cuts until the end of the year.
The death of Iranian President Raisi doesn’t change anything for the market as quoting the Supreme Leader Ayatollah Ali Khamenei “there won’t be any disruption to the country’s affairs”. In the big picture, crude oil is still trading in a 70-90 range, so there’s nothing exciting going on, but in the short-term it should remain supported unless there is a latent slowing down in demand.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil probed below the trendline several times but failed to extend the drop into new lows. The market got stuck in a consolidation just beneath the key $80 level and we will likely need a catalyst to get things going again.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the key resistance zone around the $80 level and we can also see that we have a downward trendline adding extra confluence to the barrier. This is where the sellers keep stepping in with a defined risk above the resistance to position for a drop into new lows. The buyers, on the other hand, will need a breakout to the upside to start targeting an extension to the $84.50 level next.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the rangebound price action doesn’t offer much trading opportunities. From a risk management perspective, the best spot for the sellers to enter short positions is around the resistance, while the buyers might want to wait for the support around the $77 level. Nevertheless, a breakout to the upside is likely to increase the bullish momentum and trigger a rally into the $84.50 level.
Upcoming Catalysts
This week is pretty empty on the data front with the only highlight being the US PMIs on Thursday where weak data might weigh on crude oil while strong figures could give it a boost.
