Upon evaluating the movements of the on different time frame charts since the beginning of this month, I anticipate that the currently prevailing geopolitical situation makes it difficult to predict the long-term price directional trend as the spiking volatility deviates from the demand and supply equation.
Now, Tehran steps up attacks on ships in the Gulf waters, warning the world of oil prices at $200 a barrel, while at the same time, crude oil futures are experiencing selling pressure since opening today, forming an ‘Exhaustive’ candle on the daily chart, indicating extensive selling pressure above $96 per barrel.
Such a reactionary move by the crude oil futures could be a record release plan from the International Energy Agency. 400 million barrels is only around 20 days of the supply that has been lost, so clearly, investors are more worried about the prospect of a lengthy blow to supply than what Trump says.
Undoubtedly, President Trumps says he has already won the war while Iranian Leadership say that they are ready to continue this war up to many months despite bearing a massive damage, continuing to chock the Strait of Hormuz since the beginning of this war as they are using this as a war tool what the whole world can’t afford an indefinite stop on trade through this route.
Now, two fuel tankers are burning in Iraqi waters after being attacked by Iran’s explosive-laden boats, forcing the country’s oil ports to halt operations. Oman has reportedly cleared all vessels out of its main oil export terminal, taking no chances.
I anticipate that Friday’s inflation data will likely decline in oil shock as the extension of this war will elevate stagflation concerns globally due to elevated oil prices, surging inflationary pressure, prompting bond markets to raise borrowing costs worldwide.
Next week, five central banks are set to meet: the US, Europe, Britain, Australia, and Canada, leading to a surge in bets that none will ease, while Australia is expected to go for a hike.
On the other hand, Thursday are showing exhaustion, weighed down by a firmer U.S. dollar and waning hopes for near-term U.S. interest rate cuts as higher energy prices surge inflationary concerns.
Technical Levels to Watch
In a daily chart, WTI cured oil futures, after opening the day at $92.45, tested the day’s high at $95.96, and the day’s low at $90.84, are trading near the day’s low, could find a breakdown below the immediate support at $86 where a breakdown could push the futures to test the lows at $82 from where a reversal could be seen.
In conclusion, I find that such deviation by the crude oil futures despite Iranian threats raises hopes on escalation of this war very shortly as the U.S. President Donald Trump would prefer to avoid risk at November election as the continuity of this war could deviate public opinion, while his war partner Israeli Prime Minister Nitanyahu is also passing through the same situation before elections in Israel in October this year.
I anticipate that this month’s closing of WTI crude oil futures will define the further directional moves for the other commodities.
Disclaimer: Readers are advised to take any position in WTI crude oil at their own risk, as this analysis is based only on observation.
