Oil News: Crude Oil Analysis Highlights Rising Conflict Risk Ahead of Iran Negotiations

April WTI Edges Higher as $66.27 Pivot Holds Four Days

April West Texas Intermediate (WTI) crude oil futures are slightly better early Tuesday after touching their highest level since June 23 the previous session at $67.28. The market has been straddling a former top at $66.27 for the past four days, suggesting this price level has become a pivot.

Our work indicates that a sustained move over $66.27 will signal the presence of buyers waiting for the next catalyst to trigger a breakout over Monday’s high at $67.28 and possibly into a pair of former tops at $68.11 and $69.37.

Key support today is an uptrend line from the January 7 main bottom at $55.48, coming in at $64.70. This is followed by a 50% level at $64.52.

Further down is a pair of 50% levels at $62.84 and $61.08. The major support and trend indicators are the 200-day moving average at $60.97 and the 50-day moving average at $60.43. The 50-day MA is slowly creeping up and is likely to cross to the strong side of the 200-day MA within a few days, which would be a bullish signal.

Iran Talks Thursday with the Clock Already Ticking

Fundamentally, buyers continue to assess the risks to supply if there is direct military activity between the United States and Iran. In the meantime, talks centering on Iran’s nuclear program are expected to resume in Geneva on Thursday. The U.S. wants Iran to give up its nuclear program, but Iran has yet to yield to pressure, citing it as their right. They have also denied trying to develop an atomic weapon.

Last Thursday, President Trump said he has a 10-to-15-day window before he would consider bombing Iran. With the next meeting on Thursday, it’s possible that a U.S. attack could begin over the weekend if a deal or even the framework of a deal isn’t struck during this round of negotiations.

At this point, the bullish price action is being generated by aggressive traders hedging against the worst-case scenario — an actual disruption in oil supply. So far, no oil has been lost, but the recent rally suggests traders have taken about 6% to 10% of protection.

More evidence that the United States is moving closer to a showdown with Iran: Reuters reported that the State Department is pulling out non-essential government personnel and their families from the U.S. embassy in Beirut.

Meanwhile, with the main focus on a potential supply disruption, traders are ignoring warnings of uncertainty for global growth and fuel demand after President Trump announced he would raise a temporary tariff to 15% from 10% on U.S. imports from all countries.

Watch Thursday — Aggressive Hedging Could Start by the Weekend

Looking ahead, traders should pay close attention to the negotiations between the United States and Iran on Thursday. If nothing is accomplished, the clock will start ticking over the weekend for the start of a bombing campaign. We could start seeing more aggressive hedging on Thursday or Friday as traders begin pricing in military activity.

More Information in our Economic Calendar.