Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

WTI Hesitates At $70, Iran Deal Now In Focus

Published 2018-05-08, 09:54 a/m
Updated 2023-07-09, 06:32 a/m

Oil is back in the spotlight after breaking above $70 a barrel and reaching a 3.5-year high. But with geopolitical risks lurking in the background, can it stay there?

The weekly chart has continued to defy the doomsayers by appreciating over 170% since the 2016 lows. Trading within a bullish channel and having now recovered over 50% of losses endured between 2014-2016, logic would point to further eventual upside from here.

The daily chart also backs up this view with a predominantly bullish trend structure, a recently added bull flag breakout and a 20-day average, which is acting as support. And let’s not forget the near-record bullish exposure from large speculators who retain their optimistic outlook for the oil market. Still, there are reasons to remain a little cautious.

Despite breaking to new highs, its failure to close above $70 warns of a potential fake-out. And that it produced a bearish hammer leaves room for a retracement from these highs at the very least. But in the context of the daily and weekly charts, this is a minor warning at best, so it may be geopolitics that creates a larger directional move from here.

Trump is expected to announce today whether Iran’s nuclear deal will be recertified. An openly vocal critic of the deal, Trump wants out and aides believe he will scrap it. And if it is to be replaced with fresh oil sanctions for Iran, we could see oil prices break markedly higher.

But then again, this is a president who has a history of verbally lashing out ahead of key decisions and, on some occasions, doing the complete opposite. Therefor oil could be vulnerable to whipsaws at current levels, and such a spike would put it on the backburner. But if oil prices are to stabilize and respect its bullish trend, perhaps $70 can be taken out with conviction after all.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.