Crude oil jumps as patience wanes in US-Iran standoff

Fundamental overview

Oil declined as the US market closed yesterday and carried the decline into Asian hours. No bearish triggers were present, so the move was likely technical. This morning, however, prices jumped sharply and wiped out all the declines.

Traders may be growing impatient as there have been no new developments on the US-Iran front. Iran's government spokesperson said yesterday that Foreign Minister Araghchi presented "a US proposal" to the cabinet, but no additional details emerged.

Trump told reporters he must decide between "blow them up or make a deal" with Iran and added that the conflict would end "very soon, one way or the other". He has used that language for months, so it is not new.

Going forward, a breakthrough in US-Iran talks would quickly push oil prices lower, whereas a prolonged stalemate or a renewed escalation would keep the market supported and could send it to new highs.

Crude oil technical analysis – daily timeframe

Crude oil may be forming a range near the lower boundary of its channel. A pullback to the lower boundary could bring in buyers, with risk below that level, aiming for a rally to 110.00 resistance. Sellers are targeting a downside break to drop to 68.00 support, with 80.00 as the initial target.

Crude oil technical analysis – 4 hour timeframe

The price broke above a minor downtrend line and extended gains as buyers stepped in with greater conviction, targeting 96.77. A move to 96.77 could attract sellers, with risk above that level, positioning for a drop to the channel's lower boundary. Buyers want a breach higher to add bullish bets toward 110.00 resistance next.

Crude oil technical analysis – 1 hour timeframe

The price broke above a minor resistance zone near 91.40. A pullback could invite buyers at the former resistance turned support, with an eye on new highs. Sellers want the price to slip back below that support to extend the decline to the channel's lower bound.

Upcoming catalysts

Today brings the US ISM Manufacturing PMI and the latest weekly jobless claims. Friday's US nonfarm payrolls report closes out the week. The spotlight, however, stays on US-Iran developments.