FX.co ★ CL/Crude Oil

In reaction to an interim agreement between the United States and Iran, oil prices dropped on Thursday. The agreement might reopen the Strait of Hormuz and put an end to the war with Iran. Iranian oil may once again be available on international markets as a result. WTI oil dipped to $74.70, while Brent oil slid to $79.40. This suggests that the war premium is starting to decline and that the markets are pricing in lower supply risk. The possibility of Iranian barrels returning is the main factor affecting oil prices. Within 30 days, oil and gas will be able to pass through one of the busiest shipping channels in the world if the Strait of Hormuz is reopened. The greater concern for oil is that next year's scarcity could become a surplus. The IEA estimates that after Middle East oil returns in 2027, supply may surpass demand by 5.05 million barrels per day. This could cause prices to decline. Because of the ongoing high rate of inflation, the Fed has become more hawkish. Lower oil demand and slower economic growth could result from a rate hike by the Fed later this year. Unless the U.S.-Iran pact collapses once more, the supply expansion and poor demand constitute a pessimistic setup for oil prices. On the short-term chart, WTI oil has dropped below $80, which served as the main level of support following the conflict between the United States and Iran. Short-term further declines are now possible due to this breakout, with $87 continuing to be the crucial resistance level. However, the 4-hour chart reveals that RSI has short-term reached severely oversold levels, suggesting that a rebound may be imminent. Additionally, the weekly chart indicates that the crucial support for WTI oil was between $80 and $78. Following the $78 break, $69 is the immediate support. Additionally, if the WTI oil price falls below $80 on the weekly close, the RSI is trying to break below the mid-level. The $66 to $73 range continues to be the crucial major support zone, according to the WTI oil daily chart. The declining trend line from September 2023 also highlights this support zone. WTI will probably stabilize between $80 and $100 if the $66 support level holds and prices rise above $80. The fundamentals of the U.S. natural gas market, WTI crude, and Brent have changed since June 19. Following the signing of a memorandum of understanding between the United States and Iran earlier this week that lifts the naval blockade, reopens the Strait of Hormuz to commercial traffic, and begins a 60-day negotiation to resolve the wider geopolitical tensions, WTI crude and Brent may begin to see a supply correction. Over 11 million barrels per day of crude were idle in the region as a result of the commercial vessel stoppage, which nearly completely disrupted the region's crude supply. The OECD's oil inventory levels are at their lowest point in over 20 years, having been heavily drawn during the period of supply shortages to meet demand. Crude inventories are anticipated to replenish once the crude supply is back online; however, this will depend on a number of factors, such as logistics, mine clearance, technical difficulties, etc., as well as when crude shipments may really begin to resume. Even if supply was limited by lower demand due to higher prices and physical unavailability, demand persisted in some regions of the world, particularly in large markets where refining activity was evident, keeping the physical balances for oil tight for the upcoming weeks. WTI costs $75.93 for two hours. After the strong decline below the red 50-period MA at $80.76, green bullish candles kept the 0.236 Fib level near $77.69. Due to buyer absorption in the red bullish rejection wicks, higher lows from the $72.79 swing are being generated. The RSI is remaining near 48, neutral. The pivot area for white volume is from $77 to $80. Near $80.76, a declining trendline from highs caps upside. After the recent price retreat to the 2-hour broader channel downside floor, the overall bias is neutral-to-bullish to continue rising in a neutral-to-bullish zone above $77.69. Fib levels convergence is present for short-term price stabilization with higher lows emerging.