Crude's next test: official word on reported Iran-US preliminary accord

According to ILNA Telegram, which cited Al-Sharara news agency, Tehran and Washington are said to be closing in on an initial agreement:

• Citing a diplomatic source familiar with the intensive diplomatic efforts between Tehran and Washington to secure a preliminary agreement meant to ease tensions, Al-Sharara news agency said the coming hours would prove decisive in shaping the agreement's fate.

• ILNA Telegram, citing Al-Sharara news agency, reported that Tehran and Washington were on the verge of a preliminary agreement and that the coming hours would be decisive.

Assessment:

For traders hoping for less friction between the US and Iran, the headline offers encouragement. An initial agreement might remove some geopolitical risk from crude oil and lend support to stocks. Still, the report rests on a diplomatic source, and the headlines provided carry neither official confirmation nor any detail on the proposed terms.

Traders will next look for confirmation from Washington and Tehran. The language suggests headway, while also making plain that the agreement remains under negotiation. Whether that headway becomes concrete may be settled in the coming hours. Until that happens, a conflicting headline could leave the optimism exposed.

On the technical side, crude oil pushed down to a fresh low of $95.15 and then recovered to roughly $95.75. That decline moves the price further away from the $97.00-$98.48 swing zone. The zone now acts as resistance, providing sellers with a reference point for risk.

Sellers keep the upper hand while the price stays under $98.48, leaving scope to test lower levels. The next significant target is $91.60, the 38.2% retracement of the rally from the July low to the September 15 high. A return above $98.48 would reduce the bearish tilt.

By way of context, crude oil traded near $68 when the war started on February 28. Even after the recent pullback, prices are still well above that prewar mark.