Oil hits highest since May as war fears grip markets
Oil surged to its highest since May on worries about US-Iran escalation, lifting Treasury yields and pressuring gold, while stocks slipped.
Crude oil prices rose again on doubts about a Russia-Ukraine energy ceasefire and a prolonged US-Iran standoff.
Oil eased in the final days of last week after Trump said he had ruled out strikes on Iran before the November elections and described the discussions as productive.
Over the weekend, Tehran said Washington's answer to its offer to reopen the Strait of Hormuz was not enough. Efforts to bridge the gap remain under way, and Iran's Foreign Ministry Spokesperson said today that the government is still going over US positions and will get back through intermediaries once that review is finished.
On Sunday, Trump also claimed that Russia and Ukraine had agreed to an energy ceasefire and would stop striking each other's energy infrastructure. Axios notes that Trump made a comparable declaration a month ago, yet neither side confirmed a deal, and both countries kept up attacks on energy facilities.
Ukrainian President Zelenskiy said this morning that Russia had broken the energy ceasefire Trump announced, though he added that Kyiv is still waiting for details of the talks between Washington and Moscow.
Steps to increase Russian diesel exports to the US might help calm concerns about fuel availability, but they would not fix the shortage of crude flows through Hormuz.
Going forward, the main attention will stay on US-Iran negotiations, although a cooling of Saudi-Houthi and Russian-Ukraine attacks could also restrain any rise in crude prices. A negotiated breakthrough and a reopening of the Strait of Hormuz would trigger a sharp selloff in oil on the prospect of greater supply, while a breakdown in talks would not change much at this stage, even though it would trim the downside in crude.
Daily Chart: Crude Oil Technical Assessment
On the daily chart, the crude oil CFD contract has been climbing fairly steadily since bouncing from the lower edge of the channel, with buyers stepping in to push toward the 110.00 resistance. A fresh pullback to the channel's lower boundary would probably attract buyers again, with risk defined below the channel, as they continue to aim for 110.00. Sellers, meanwhile, would need to see a break to the downside before adding positions for a move toward the 68.00 support, with 80.00 serving as the first target.
Four-Hour Chart: Crude Oil Technical Assessment
On the 4-hour chart, the break above the falling trendline cleared the way for a rally to the 96.77 level. Should the market reach that area, sellers are likely to enter with a defined risk above the level, positioning for a fall back to the channel's lower bound. Buyers, in turn, will be seeking a break higher to add to bullish exposure, with the 110.00 resistance as the next objective.
One-Hour Chart: Crude Oil Technical Assessment
On the hourly chart, the price pulled back to the minor uptrend line and rebounded as buyers stepped back in to continue pressing toward the 96.77 resistance. The market broke above the downward counter-trendline this morning, and buyers used the breakout to increase bullish positions into the 96.77 resistance. Sellers will be hoping to see the price fall back below the counter-trendline to set up a pullback to the uptrend line, where buyers would likely reappear and push toward fresh highs. The red lines mark today's average daily range.
Catalysts Ahead
Wednesday brings the US CPI report, while Thursday has US PPI, Retail Sales and the latest Jobless Claims numbers. The main focus, however, will remain on US-Iran negotiations.
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