Oil Price Forecast: Iran-Oman Talks Push WTI to $75 as Brent Tests $80

Oil prices remain negative as investors look for positive talks between Iran and Oman. Brent crude oil fell to $83 while WTI oil dropped to $75. The talks raised the hopes that the United States and Iran could reach final peace agreement. This deal could reopen the strait of Hormuz and allow oil shipments to flow again in and out of the strait. This option helped to bring down the oil price supply risk premium.

But the oil market still remains uncertain. The United States has not adopted the offer to hand over the control of Iranian shipping in the Gulf. Iran has also threatened to retaliate against renewed attacks from the United States. Meanwhile, Houthis also alleged that Saudi oil tankers were attacked in Yanbu and off the coast of the Gulf of Aden. These risks could slow down the oil shipping and curtail continued weakness in oil prices.

The increase in the US crude inventories added more pressure to the market. The stocks increased by 2.5 million barrels to 407 million barrels. There was also a slight decline in amount of crude refined by refiners while imports increased.

WTI Crude Oil Technical Analysis: $74–$75 Support Holds the Key

The 4-hour chart for WTI crude oil shows that the price failed to sustain gains above $90 and pushed back towards the $75 area. The price is now consolidating in the short term to find the next move. A break above $83 will keep the rally towards the $90 area. But a break below $70 will likely push WTI crude towards the $60 region.

WTI crude oil prices have been consolidating in the short term without any clear direction over the past few months. This volatility is further observed on the weekly chart which shows that prices have remained within wide range between $120 and $70.

The price rebounded from $66 within the strong support region. But it failed to sustain any gains above $90 and pushed back towards the $75 support. A break below the $74-$75 support will push the price towards the $66 area. But the RSI has fallen below the midpoint which increases the risk of a further drop.

Brent Crude Oil Technical Analysis: $80–$81 Support in Focus

The daily chart for Brent crude oil also shows strong volatility as the price breaks below the 50-day SMA and moves towards the $81 support. A break below the $81 support will push Brent crude oil towards the $74 region.

As long as the price holds the $74 support, it will likely rebound towards the $90 area. The price must remain above the 200-day SMA in the $86 region to sustain any positive outlook.

But the RSI has fallen below the midline which increases the risk of further drop before the next rally. Overall, Brent crude oil prices remain within wide range after the U.S.-Iran war due to strong volatility and uncertainty. Until a definite resolution between the U.S. and Iran is reached, prices may remain uncertain.

The weekly chart for Brent crude oil also shows a failure at the $100 resistance. The weekly candle has a sharp shadow at $100, which points to the downside towards the $80 support. A break below $80 will push the price towards the $68 region.

But the $80 support is very significant due to the intersection of the 50- and 200-week SMAs. A sustained rally above $100 is required to maintain bullish momentum in the Brent crude oil market.

Bottom Line

Oil prices may remain volatile as investors watch Iran-Oman talks and the security situation in Middle East. The peace agreement could reopen the Strait of Hormuz and push prices lower. The rising US crude inventories also increased pressure on oil prices. But the renewed attacks on ships or energy facilities may escalate the tensions and quickly lift prices. WTI must hold the $74-$75 to avoid the drop to $66. Brent must stay above $80-$81 to prevent the decline towards $74. The clear peace deal or fresh supply disruption may decide the next major move in oil.

Read more: WTI and Brent Rebound as US-Iran Talks Remain Uncertain