Oil News: Weekend Attacks Erase Friday’s Crude Oil Selloff

Weekend Attacks Erase Friday’s Oil Selloff

Friday’s sellers got it wrong. More attacks landed over the weekend, the Oman meeting was pulled, and the pipeline is still down. Nothing about that says sell crude. Monday’s gap higher took back the entire pullback. The inside move on the daily charts says the market is digesting, not breaking out yet.

October WTI crude oil futures are trading at $103.19, up $3.14 or 3.14%, at 03:44 GMT Monday. November Brent crude oil futures are at $107.89, up $3.28 or 3.14%. Both contracts opened more than 3% higher before pulling back slightly.

The Peace Trade Lasted One Session

WTI and Brent rallied 8% last week with more than 6% of that coming Thursday alone. Friday, the Financial Times reported a temporary shipping agreement with Iran was in the works. Traders used it to strip risk premium ahead of the weekend.

Omani Foreign Minister Badr Albusaidi killed that trade Sunday. The meeting between Iran and Gulf countries is off. No talks have produced a working agreement since an interim deal collapsed weeks after it was reached in June. Friday’s selling was built entirely on a meeting that no longer exists.

WTI settled Friday at $100.05, down $2.43 or 2.37%. Brent closed at $104.61, down $3.02 or 2.81%. Monday took all of it back.

Attacks Spread While Sellers Were Waiting

Saudi state media showed damage to homes and a mosque in Jazan province Sunday. The Houthis struck a Saudi military base in a neighboring province and reached the strategic island of Perim near the Bab el-Mandeb Strait on Friday.

In the Strait of Hormuz, another vessel took a projectile that started a fire and forced the crew to evacuate, according to UKMTO. A projectile struck an Iranian commercial vessel off the coast, killing one crew member and wounding four.

Hormuz traffic dropped to seven vessel transits Thursday from 11 Wednesday. Before the conflict started in late February, the strait averaged 125 commodity-vessel transits a day and carried one-fifth of daily global oil supply.

Saudi Lost Its Last Bypass

The East-West pipeline took a drone strike from Iraq on Friday. The hit landed on a pumping station rather than the line itself. Electrical systems and pumping equipment do not come back quickly.

The pipeline was the Hormuz bypass. Without it, up to 4% of global supply has no alternative route. Saudi output was already at 6 million barrels per day in August, down 2.3 million barrels per day, according to the International Energy Agency. Lowest in more than three decades. The strike landed on a system that was already producing at emergency levels.

Diesel at $6 Puts Central Banks on Watch

U.S. diesel crossed $6 a gallon Thursday for the first time. Commerzbank raised year-end diesel to $1,200 a ton from $950. Jet fuel went to $1,230 from $980. The bank also pushed its Brent target to $85 from $75.

Two ECB policymakers said Friday they would consider additional rate increases if energy costs keep running. Crude above $100 is a commodity story. $6 diesel makes it an inflation story. Those are different meetings.

Daily October WTI Crude Oil Futures Technical Analysis

October WTI crude oil futures are edging higher early Monday as traders try to reverse Friday’s losses. The current inside move suggests investor indecision and impending volatility. The main trend is up according to the daily swing chart. A trade through $104.46 will negate Friday’s potentially bearish closing price reversal top and signal a resumption of the uptrend.

A trade through $98.48 will confirm the closing price reversal top. It won’t change the main trend to down, however, it will shift momentum to the downside with 50% levels at $96.59 and $92.04 as potential targets.

There are potential upside targets at $105.60 and $110.00.

Daily November Brent Crude Oil Futures Technical Analysis

November Brent crude oil futures are higher on Monday, trading inside Friday’s range. The main trend is up according to the daily swing chart, however, Friday’s closing price reversal top suggests momentum may be shifting to the downside.

A trade through $109.97 will negate the closing price reversal top and signal a resumption of the uptrend. This could lead to a near-term test of a former top at $113.30.

Taking out Friday’s low at $103.50 will confirm the closing price reversal top. This won’t change the trend to down, however, it could lead to a shift in momentum with potential downside targets a pair of pivots at $101.56 and $97.27.

What to Watch

The Oman meeting was Friday’s selling catalyst. It is off and nothing has been rescheduled. The pipeline is a hardware repair with no timeline attached. Those are the only two paths to lower prices right now, and neither one is open. My read is that buyers hold this market until somebody puts oil back on the water. Hormuz traffic and Saudi repair updates are the only headlines that matter this week.

The bias leans bullish on both contracts with the main trends up on the daily swing charts. Friday’s reversal tops are still alive. $104.46 on WTI and $109.97 on Brent clear them. Monday’s rally has not reached either level. The supply story changed over the weekend. The chart has not caught up yet. Downside, $98.48 on WTI and $103.50 on Brent confirm the pattern and flip momentum toward the retracement zones at $96.59 and $92.04 on WTI, $101.56 and $97.27 on Brent.

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