Fundamental Analysis WTI oil did not fluctuate much after incurring losses the previous day; it is selling at $89.50 a barrel in the Asian time zone on Friday. Crude oil prices are static after news broke that the US military escorted about 40 ships transporting 18 million barrels of oil through the Strait of Hormuz on Tuesday. As quoted by CNN, citing US sources, forces intercepted a cruise missile and successfully defended against several drone attacks in what has been termed a record wartime mission. If true, this will definitely ease market concerns about the safe transport of oil supplies. However, oil prices could still fall due to geopolitical instability. US attacks on Iran and threats of attacks by Israel on Tehran have revived concerns of possible disruptions to supply in the region. On the other hand, the latest peace talks proposed by Russian President Vladimir Putin have helped stabilize prices to some extent. On Thursday, the average diesel price in the US rose to an all-time high amid tight global supplies. Ongoing hostilities between the US and Iran, along with disruptions to Russian diesel export facilities from Ukrainian attacks, drove the US national average diesel price to an all-time high of $5.820 per gallon.
Technical Analysis Oil (USOIL) is trading at $89.45 on the daily chart. This marks a critical technical choice for the market, given the strong rebound from the June lows of about $67.50. Market structure has improved as buying has increased following the extended downtrend, with higher lows and a breakout above the consolidation range of $83.30-$84.00. The rebound is approaching the bearish trend line drawn from the April high of around $104.50. Immediate Resistance is located between $89.45 and $91.57. Although price has broken the psychological barrier of $89.00, a daily close above $91.57 will provide more reliable evidence of buyers' ability to break the bearish structure. In case of a breakout above the mentioned level, the following resistance levels will be $93.88 and $96.77. Otherwise, if the range is rejected, crude oil could fall to $86.37 and further to $83.30, where buyers will have to defend the recovery structure. Fibonacci numbers emphasize the importance of the current zone, as the fall from approximately $104.50 to $67.50 is apparent; then the 50% correction comes close to $86.00, the 38.2% correction to $90.40, and the 23.6% correction to $95.80. The price has risen above the 50% correction and is heading toward the 38.2% correction level, showing that buyers have gained control of the medium-term pattern. A break above $90.40 will confirm the bullish case and raise the probability of a move toward higher resistance levels. Now, the Ichimoku Cloud is looking constructive, with price above the latest cloud formation and the upcoming cloud providing support in the low-$80s. Because both the Tenkan-sen and Kijun-sen are now below the current price, this is helping the recovery process. As long as the price stays above the cloud and within the $83.30 to $84.00 range, the medium-term recovery will hold. Momentum shows improving demand, but it also reflects caution as price approaches an important resistance level. The RSI is approaching 64.9, revealing bullish momentum but not extreme, while the Stochastic is at 80.8 and approaching overbought levels. The MACD is positive, supporting the overall upward trend. The overall view is cautiously bullish above $86.00, while $91.57 is the critical breakout point. If price closes above this point on a daily chart, it could move to $93.88 and $96.77, while failure to break out above the resistance level could lead to declines to $86.37 and $83.30.
