Gulf Risk Is Back in the Bid
Crude gave back Tuesday’s break, then buyers came back for more Wednesday. Iran’s talk of mediation did not open talks with Washington.
At 10:28 GMT, December WTI crude oil futures are trading $99.07, up $1.25 or +1.28%. December Brent crude oil futures are trading $110.03, up $1.24 or +1.14%.
Brent and WTI both hit fresh multi-month highs Tuesday, then sold off after Iran’s president discussed mediation with Pakistan’s army chief. Shorts got their pullback. It did not hold.
The Diplomatic Story Did Not Give Sellers Much
A Qatari delegation arrived in Tehran. Iran said it had not received a response from Saudi Arabia or the Houthis to its mediation offer.
The Houthis claimed attacks Monday on Saudi Aramco’s Yanbu site, the Shaybah oilfield and airports in Riyadh and Abha. Yanbu got hit last week. These are not throwaway headlines anymore.
The Inventory Report Has Buyers Leaning In
API data showed a large draw in U.S. crude stocks last week, with gasoline and distillate inventories also lower. The government report is due at 14:30 GMT.
Crude already has a Gulf supply problem in front of it. A draw on top of that does not give sellers much to work with. Energy Department officials are working with refiners around the world to increase fuel output. The market has heard that before.
Brent Oil Price Forecast
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See all Brent Oil forecastsDaily December WTI Crude Oil Futures Technical Analysis
December WTI crude oil futures are edging higher early Wednesday as traders continue to monitor the volatile conditions in the market. On Tuesday, the market reached $101.37, the June contract high, but then fell sharply to $95.25 before settling at $97.82.
The main trend is up according to the daily swing chart. However, a potentially bearish closing price reversal top was formed on Tuesday, indicating that the selling may be greater than the buying at current price levels. The closing price reversal top does not indicate a change in trend, but rather a potential shift in momentum. If confirmed, it could lead to a two-to-three-day correction.
A trade through $95.25 will confirm the closing price reversal top. The first downside target is the retracement zone at $93.69 to $91.87. This is followed by the 50-day moving average at $88.03.
A trade through $101.37 will negate the closing price reversal top and signal a resumption of the uptrend with $106.75 and $107.77, potential upside targets. The main trend will change to down on a break under the swing bottom at $86.00.
Daily December Brent Crude Oil Futures Technical Analysis
December Brent crude oil futures are moving higher early Wednesday despite posting a potentially bearish closing price reversal top the previous session.
The main trend is up according to the daily swing chart. A trade through $111.99 will negate the closing price reversal top and signal a resumption of the uptrend. Taking out $105.95 will confirm the closing price reversal top. This could trigger a two-to-three-day pullback into at least $104.53 to $102.84.
Potential resistance remains $111.99 and $113.63. If support fails at $102.84, prices could tumble back to the swing bottom at $97.06 or the 50-day moving average at $96.88.
The near-term direction will likely be determined by whether traders are still willing to buy strength by taking out offers, or if they’ve switched strategies to buying dips at value areas or support.
What to Watch
The government inventory report is the next check on Wednesday’s rebound. Gulf shipping and Tehran’s actual response to mediation will decide whether this bid has legs or runs out of buyers.
For December WTI crude oil futures, my bias is still to the upside because the trend is up according to both the swing chart and the 50-day moving average. However, the closing price reversal top makes me a little cautious. Taking out $101.37 will make me a little more confident because it will indicate that traders are still willing to buy strength.
A pullback into $93.69 to $91.87 and a technical bounce from there could be an indication that traders have shifted to buy the dip mode. If this zone fails to hold then the next major test will be the 50-day moving average.
For December Brent crude oil futures, my bias is to the upside as long as the 50% level at $102.84 holds as support. If it doesn’t my bullish outlook will weaken, meaning that the next key level may be the 50-day moving average at $96.88.
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