Crude Oil Holds Weekly Gains Near Six-Month High as Iran Deadline Looms
April West Texas Intermediate (WTI) crude oil futures are edging lower on Friday as they hover near a six-month high, nonetheless, they’re still holding on to their weekly gains. Underpinning the market are fears that simmerinhttps://www.fxempire.com/tools/economic-calendarg tensions between Washington and Tehran may trigger an aggressive military response from the U.S. Navy if Iran doesn’t agree to a deal on its nuclear program. Early Friday, global benchmark Brent crude oil is up a little over 5% and U.S. benchmark WTI is posting a 5.2% gain.
Trump’s 10-to-15-Day Warning Puts Traders on Edge
If you believe President Trump, “really bad things” can happen in the next 10 to 15 days if the United States and Iran fail to reach a deal. The uncertainty is making the market nervous, which encouraged short-sellers to cover aggressively and bullish speculators to enter the picture. Although the “wait-and-see” approach is leading to a subdued trade on Friday, it could be the precursor to an extremely volatile trade.
Iran and Russia Plan Naval Exercises, Raising the Stakes
Perhaps to aggravate the U.S. while elevating the intensity of the situation, Iran is scheduled to join Russia in naval exercises in the region, according to a local news agency.
Strait of Hormuz Shutdown Could Trigger Another 10% to 15% Surge
At issue is a potential supply disruption if a battle between the two forces shuts down the Strait of Hormuz, the key waterway that transports about 20% of global supply. If supply is impacted, crude oil prices could climb another 10% to 15% on top of the 20% advance since mid-December.
Weekend Risk Keeps Buyers Lurking Despite the Pause
Since the market is currently playing a waiting game, today’s slight pause is not really a big surprise. Earlier in the week, short-covering and speculative buying drove prices 4% higher on Wednesday. As traders regroup, prices should become more volatile as we approach the 10-to-15-day deadline. Since anything can happen over the weekend, despite Trump’s declaration, we could see some aggressive buying into the close, unless there is an intraday announcement targeting progress in the negotiations.
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 forecasts9-Million-Barrel Inventory Drop Adds Another Layer of Support
Although there is a supply glut and expectations of lower demand, prices are also being supported by a 9 million barrel drop in U.S. crude oil inventories. On Wednesday, the U.S. Energy Information Administration (EIA) credited the drop to refining utilization and increased exports.
Technical Outlook: Uptrend Intact with Eyes on $68 and $69 Resistance
Technically, the trend is up. A trade through this week’s high at $67.03 could create the upside momentum needed to challenge former tops at $68.11 and $69.37.
Currently, April WTI crude oil is trading on the weak side of a former top at $66.27. If prices accelerate to the downside, traders will start to eye the uptrend line at $64.30 for support.
Long-term support is being provided by the 200-day moving average at $60.89 and the 50-day moving average at $60.09. The 50-day MA is beginning to hook up, suggesting it may soon deliver a bullish signal when it crosses to the strong side of the 200-day MA.
More Information in our Economic Calendar.