Crude rallies as US-Iran deal hopes fade and new strike plans loom

Crude oil rebounded from a significant trendline a day earlier after reports emerged that the US was drawing down troop numbers at bases throughout the region and reducing staff at diplomatic posts because of heightened security risks. The advance then gained strength when The New York Times reported that American and Israeli militaries had drafted plans for fresh strikes on Iran once the US midterm elections are over, while reinforcements are slated to be fully in place by early November.

At the same time, the conflict between Saudi Arabia and the Houthis remains a major danger to energy infrastructure. The Houthis have stepped up their assaults on Saudi targets, with airports, military sites and energy installations among those hit.

Going forward, crude remains underpinned by intensifying Middle East tensions and the possibility of another US offensive against Iran after the midterms. Barring a de-escalation in the Saudi-Houthi fighting or an unexpected opening in US-Iran negotiations, prices look likely to keep climbing.

Crude oil technical analysis – daily timeframe

In daily trading, the crude oil CFD contract has been consolidating above 96.77, although momentum appears to be accelerating in response to fresh Middle East tensions. Buyers are expected to keep entering near these levels with a clear stop below 96.77, aiming for the 110.00 resistance area. Should the price reach that zone, sellers may step in with a defined stop above the level to position for a retreat toward the lower edge of the channel.

Crude oil technical analysis – 4-hour timeframe

A shallow upward trendline continues to mark the bullish momentum on the 4-hour view. Buyers are likely to keep using the trendline as support with a stop underneath, looking for further highs. Sellers, for their part, will wait for a break to the downside to prolong a fall into the bottom of the channel.

Crude oil technical analysis – 1-hour timeframe

There is little to add on the 1-hour view, as buyers continue to enjoy a more favorable risk-reward setup near the trendline, while sellers would need a break below the trendline and 96.77 to aim for a deeper retracement toward the lower end of the channel. The average daily range for today is also in focus.

Upcoming catalysts

US Jobless Claims data are due later today, and the week wraps up with US Flash PMIs tomorrow. Middle East developments will remain the key driver.