Oil keeps climbing as traders hedge into weekend on possible US strikes on Iran

Crude oil pushed to fresh highs yesterday, extending its advance, after the Houthis aimed a broad wave of missile attacks at the Aramco oil company.

The rally gained further momentum when the Wall Street Journal reported that the top US commander in the Middle East had personally briefed Trump at the White House on military options for Iran, an unusual in-person visit, while Washington weighed resuming major combat operations.

“This is the last weekend before the US midterm elections, so there’s some concern of a US attack over the weekend. We might see some hedging going into the weekend that could push oil prices even higher.”

“The market remains supported amid the Saudi-Houthi conflict and the possibility of renewed US strikes. We would need a de-escalation in the Saudi-Houthi conflict or a surprising breakthrough in US-Iran negotiations to get a significant correction in oil prices.”

“Keep also in mind that the market could take another US attack as an exit strategy, so after the initial spike we could see traders unwinding bullish bets. But that will depend on what Trump says after the potential attack and how strong Iran’s retaliation is going to be.”

“If we don’t see any attack this weekend, oil prices could open lower on Monday and what happens next, will depend on further Middle East developments.”

TECHNICAL READ ON CRUDE OIL: DAILY TIMEFRAME

Crude oil (CFD contract) has extended into fresh highs as concerns grew about imminent US strikes on Iran. From a technical perspective, there is little to take from this timeframe; the significant levels remain the lower boundary of the channel and resistance near 110.00, so moving to a tighter view is necessary.

TECHNICAL READ ON CRUDE OIL: 4-HOUR TIMEFRAME

In the four-hour timeframe, an upward trendline defines the bullish momentum. Buyers are still leaning on that trendline, with a defined risk beneath it, to keep pressing toward new highs. Sellers, meanwhile, will want a break to the downside before joining in for a correction toward the channel’s lower bound.

TECHNICAL READ ON CRUDE OIL: 1-HOUR TIMEFRAME

There is little more to add on the one-hour timeframe: buyers continue to have the better risk-reward setup around the trendline, while sellers will need a break below it to open the way for lower lows. The average daily range for today is defined.

CATALYSTS TO WATCH NEXT

We close out the week today with the US Employment Cost Index, although Middle East developments will remain the primary focus.