Oil bounces back as supply dangers overshadow rising shipments

Fundamental factors

Oil prices faced selling pressure on the previous day and briefly risked a decisive move below the rising channel. The decline lacked a clear catalyst, with the US-Iran standoff and ongoing supply interruptions still in place. Prices subsequently recovered and nearly reversed the week's entire decline.

Supportive factors include an intensification of Houthi strikes against Saudi Arabia, hitting airports and reportedly damaging energy infrastructure.

A storm forming in the Gulf of Mexico also poses a risk to US oil and gas output and refining. Producers have already shut in some operations as a precaution. According to Reuters, facilities representing roughly 15% of American crude production and 5% of natural-gas output may be impacted. Additionally, multiple large refineries face potential interruptions.

Talks between the US and Iran continue to be deadlocked. Iran has linked the reopening of the Strait of Hormuz to Washington fulfilling several conditions, whereas the US is requiring significant concessions from Tehran, especially regarding its nuclear enrichment. Vice President JD Vance stated this week that the US expects tangible steps from Iran, not just promises, and President Trump has turned down Iran’s most recent offer.

As a result, the oil market finds itself balanced between rising physical shipments and ongoing disruption dangers. Crude flows from the Middle East have rebounded strongly, yet assaults on infrastructure and tankers still jeopardise the dependability of those deliveries. The market will probably continue to carry a significant geopolitical and supply-risk premium until the US-Iran discussions show real advances and a clearer avenue to reopening the Strait of Hormuz emerges.

Daily chart technical view

Crude oil fell to the lower boundary of its channel and then bounced, with buyers coming in and a clearly defined risk below that level, betting on a climb to the 110.00 resistance. For sellers to gain the upper hand, a breakdown below the channel’s lower edge would be required, opening the way to new lows and eventually the 68.00 support level, with 80.00 as the initial downside objective.

Four-hour chart technical analysis

A minor downward-sloping trendline is serving as resistance. Sellers are expected to use that line as a selling level, with a clearly defined risk above it, aiming for a drop below the channel’s lower bound and fresh lows. Conversely, buyers want to push above the trendline to build on bullish momentum, targeting the 110.00 resistance area, with 96.77 as the initial barrier.

Hourly chart view

Sellers have a better risk-to-reward setup around the trendline on the hourly timeframe, while buyers need a break to open the door for new highs.

Upcoming events

The Federal Reserve’s meeting minutes are due today. US weekly jobless claims are scheduled for tomorrow, and the week ends with the University of Michigan consumer sentiment survey. However, the main attention stays on developments in the Middle East.