Oil Nears Pre-War: Hormuz Eases, Fed Hikes Loom

FUNDAMENTAL
OVERVIEW

• Oil prices continue to fall steadily after the end of
  the US-Iran war and the reopening of the Strait of Hormuz. The war related
  gains should be erased soon with the price approaching the pre-war levels
  around the 68.00-69.00 area.

  The bearish bias remains intact as traders continue to
  price out the war premium and price in the increase in supply in the next months.
  Another bearish driver is the Fed’s tightening risk as that’s going to weigh on
  the demand side.

  In the short-term, upside risks include peace between the US and Iran breaking down again and the Strait of Hormuz getting shut or US inflation data surprising to the downside and leading to a dovish repricing.

  CRUDE OIL
  TECHNICAL ANALYSIS – DAILY TIMEFRAME

  On the daily chart, we can
  see that crude oil continues to target the pre-war levels around the 68.00
  handle. If the price gets there, we can expect the buyers to step in with a
  defined risk below the support to position for a rally back into the 78.00
  resistance. The sellers, on the other hand, will look for a break to increase
  the bearish bets into the 55.00 handle next.

  CRUDE OIL TECHNICAL
  ANALYSIS – 4 HOUR TIMEFRAME

  On the 4 hour chart, we can
  see the price is trading right in middle of the two key zones. From a risk
  management perspective, the sellers will have a better risk to reward setup around
  the 78.00 resistance to position for new lows. The buyers, on the other hand, should
  wait for the price to reach the pre-war levels or break above the 78.00
  resistance to position for new highs.

  CRUDE OIL TECHNICAL
  ANALYSIS – 1 HOUR TIMEFRAME

  On the 1 hour chart, we
  have a minor resistance zone around the 75.00 handle where the price got
  rejected from several times in the past days. If we get a pullback, we can
  expect the sellers to step in around the resistance with a defined risk above
  it to keep pushing into new lows. The buyers, on the other hand, will look for
  a break to extend the pullback into the 78.00 resistance next. The red lines
  define the average daily range for today.

  UPCOMING CATALYSTS

  Tomorrow, we get the US
  Jobless Claims data and the US PCE report. On Friday, we conclude the week with
  the final University of Michigan consumer sentiment survey.