US-Iran deal hopes keep crude under pressure; setbacks may lift oil to new highs

Oil prices eased a bit yesterday following Iranian state-media reports that the country's security chief had met Supreme Leader Khamenei.

According to sources, Khamenei emphasized during the talks how vital it is for Iran to pursue its interests and carry out its conditions in order to end the war and break the deadlock.

The report was only a brief headline lacking detail, yet expectations in the market for a possible US-Iran agreement still firmed.

Reuters reported this morning that Qatari mediators handed Iran a fresh draft agreement in Tehran on Sunday, and that Tehran is weighing the proposal, with an answer expected before the week is out. The same report said the draft lays out a seven-day timetable that speaks to both sides' concerns, with each party required to take confidence-building steps every day.

Prices felt the impact of that report briefly, until a senior Iranian official said Qatar had not presented a new plan for ending hostilities with the US and that Tehran finds Qatar's ideas unacceptable. The official went on to say that Iran's position on nuclear matters is still firm and unchanged.

Overall, crude continues to find support from tensions in the Middle East and the prospect of a fresh US strike following the US midterm elections. A meaningful pullback in oil would require either a scale-back of the Saudi-Houthi conflict or an unexpected US-Iran negotiating breakthrough.

Technical Analysis: Crude Oil on the Daily Timeframe

The daily perspective shows crude oil (CFD contract) still in a consolidation phase near recent highs as optimism over a US-Iran deal built. There is little additional information to draw from this timeframe, with the key markers still the channel's lower bound and resistance near 110.00, so a closer look is needed.

Crude Oil Technical Analysis: Four-Hour Timeframe

Moving to the 4-hour chart, a shallow upward trendline is setting the bullish tone. Buyers are expected to keep using that trendline as support, with their risk defined below it, as they press on toward fresh highs. Sellers, meanwhile, will be watching for a downside break that would stretch the decline toward the lower boundary of the channel.

One-Hour Timeframe Technical Analysis for Crude Oil

On the one-hour chart, a shallow downward trendline is shaping the ongoing pullback. Sellers are likely to keep leaning on that trendline, with their risk placed above it, as they aim for a move beneath the upward trendline. Buyers, by contrast, want a break to the upside so they can add to bullish positions toward the 110.00 resistance area. The red lines set today's average daily range.

Upcoming Market Catalysts

The FOMC rate decision is on today's calendar. The US GDP report, US PCE data and the newest weekly jobless claims figures follow tomorrow. Friday brings the US Employment Cost Index to close out the week. Middle East developments will stay at the center of attention.