Oil Prices Recover as Iran Talks Fail to Ease Supply Fears
WTI and Brent crude oil prices are slightly higher early Tuesday in a volatile two-sided session. Prices fell about 1% earlier in the session as traders lightened up on long positions on the chance that talks with Iran could ease fears of a widespread Middle East supply shock. However, so far the meetings have not been able to stop Houthi attacks on Saudi Arabia.
Reuters reported that Saudi Arabia, Turkey and Pakistan held talks with Iranian officials designed to ease tensions in the Middle East. Although the talks are expected to continue, nothing was announced to calm fears of Houthi attacks on Saudi Arabia and Iranian attacks on tankers around the Strait of Hormuz.
So essentially, we have some light profit-taking on the talks. Nonetheless, prices remain elevated because of the persistent geopolitical uncertainties.
Supply Numbers Support the Bullish Case
Supporting the bullish outlook was a note from ANZ Research. They said that stress within major areas like supply, logistics, inventories and refining makes the oil market vulnerable to volatility. The fundamentals also back this statement with crude oil exports down for a fourth straight week. Additionally, oil flows through the Strait of Hormuz are only about 60% of their normal level. Meanwhile, global distillate inventories are still about 5% below their five-year average.
The real numbers are providing the support and may be setting the stage for the next upside breakout. So far, the rest of the story is just talk.
Daily December WTI Crude Oil Futures Technical Analysis
The main trend is up according to the daily swing chart. The two inside days since Friday’s wide range from $98.84 to $103.92 have had no impact on the trend indicator. The minor trend is also up.
A trade through $103.92 will signal a resumption of the uptrend. The main trend will change to down on a trade through $86.00. The minor trend will change to down on a trade through $95.25.
Brent Oil Price Forecast
Every new Brent Oil analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Brent Oil forecastsUpside targets include long-term tops at $106.75 and $107.77, followed by $111.03.
The first support is a minor retracement zone at $99.59 to $98.56. The main range forms a retracement zone at $94.96 to $92.85. This is also the key weekly pullback zone.
This week’s high at $103.13 fell short of last week’s high at $103.92. This suggests traders are not taking out offers and may be preparing for a pullback into either $99.59 to $98.56 or $94.96 to $92.85.
The major support and trend indicator on the daily chart is the 50-day moving average at $89.42. The longer-term uptrend is also supported by the weekly chart.
Daily December Brent Crude Oil Futures Technical Analysis
The main trend is up according to the daily swing chart. Two inside days have not impacted the main trend. The minor trend is also up.
A trade through $117.45 will signal a resumption of the uptrend. The main trend will change to down if the swing bottom at $95.12 fails as support. The minor trend will change to down on a trade through $105.95.
The next major upside target is the swing top at $119.50. This is followed by $123.00 and $126.41.
On the downside, the first minor support level is $111.70. This is followed by $107.26 to $105.57. The weekly retracement zone at $105.65 to $102.76 is another important support area. With the main trend up, buyers could reemerge on a pullback into this zone.
The major daily support and trend indicator is the 50-day moving average at $98.78. The weekly chart remains in an uptrend, supported by the market’s relative position to the 52-week moving average at $79.90.
What to Watch
December WTI Crude Oil Futures
December WTI crude oil futures are still leaning to the upside, supported by the main swing chart and the direction of the 50-day moving average. However, I recognize the possibility of a near-term pullback. A sustained move through $103.92 will put $106.75, $107.77 and $111.03 on the radar. If buyers take out $103.92, a close under $103.44 later in the week could produce a potentially bearish weekly closing price reversal top.
December Brent Crude Oil Futures
December Brent crude oil futures are supported by the main swing chart and the 50-day moving average. This is fueling my bullish outlook. A sustained breakout over $117.45 will put $119.50 on the radar. Taking out $119.50 will strengthen my conviction and open the door to $123.00 and $126.41.
Although upside momentum may be slowing, with the main trend up, buyers are likely to find $111.70 and $107.26 to $105.57 attractive areas. A failure to hold $105.95 would be the first sign that the minor trend is turning down. A break through $102.76 would weaken my outlook.
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