FUNDAMENTAL
OVERVIEW

Oil prices plunged on
Friday following a barrage of positive news. It all started with an Axios
report saying that under a compromise proposal under discussion, some of
the highly Iran’s enriched uranium would be shipped to a third country, not
necessarily the US, and some of it would be down-blended in Iran under
international monitoring. In return, the US would release $20 billion in frozen
Iranian funds. Trump denied the release of the funds but more reports citing
officials talked about this potential compromise.

The selloff then gathered
steam after Iranian Foreign Minister Aragchi announced
that the passage for all commercial vessels through the Strait of Hormuz was
declared completely open for the remaining period of the ceasefire. Trump
followed up with a post on Truth Social thanking Iran and even calling the
Strait the “Strait
of Iran”. Finally, Trump told reporters that he expected a deal in a day or
two and prohibited
Israel from bombing Lebanon.

Everything pointed to a
deal and to the end of the war, but we started to see a rebound in prices into
the weekend after Trump said that the US would keep the blockade of the Strait
of Hormuz in place until a deal with Iran is finalized. The more conservative
traders got vindicated as the market opened with a positive gap following
renewed tensions over the weekend after Iran closed the Strait again in
retaliation of the US blockade.

The good news is that the
ceasefire is holding and we are still getting reports of ongoing talks and preference
for a diplomatic resolution. The bad news is that the ceasefire is expiring
tomorrow unless we get another extension which is what the market expects. This might keep oil prices supported into the deadline.

CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can
see that crude oil eventually extended the selloff into the 78.00 support where
the price bounced as the buyers stepped in with a defined risk below the
support to position for a rally back into the 93.00 resistance. If the price
gets there, we can expect the sellers to pile in to position for another drop
into the 78.00 support. The buyers, on the other hand, will look for a break
higher to increase the bullish bets into the 120.00 level next.

CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, we have
a downward trendline defining the bearish momentum. We can expect the sellers
to lean on the trendline with a defined risk above it to keep pushing into new
lows. The buyers, on the other hand, will look for a break to increase the
bullish bets into the resistance.

CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, there’s
not much we can add here but given the proximity of the trendline to the
resistance, the sellers might want to split their positions between the trendline
and the resistance to position for new lows. The buyers, on the other hand,
will look for upside breaks 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 Retail Sales. On Thursday, we get the latest US Jobless
Claims figures and the US PMIs. The focus remains on US-Iran headlines ahead of
the ceasefire deadline tomorrow.