FX.co ★ CL/Crude Oil

WTI, or US Crude Oil, follows a corrective retreat below $95.80, extending Thursday's decline during Friday's Asian trading session. The energy commodity has lost its two-day winning streak and is currently trading around $92.00, down 2.0%. The median consensus indicates that US and Iranian negotiators have begun talks on an exit strategy from the confrontation. Under the proposal, Iran is expected to reopen the Strait of Hormuz in return for lifting US sanctions imposed on it. This would ease supply fears and become a major contributor to pressure on oil prices. Nonetheless, the Houthis' missile attack on Saudi Arabia remains high, supporting geopolitical tensions and serving as an overhang on oil prices. According to Bloomberg, which issued its report Thursday, Saudi Arabia's Oil exports via the Strait of Hormuz rose to an all-time high of 5 million barrels per day so far in September, up from 3.4 million barrels in August and 4.5 million barrels in July. Sources at Bloomberg indicated that Oil is being exported from the Gulf region by countries such as Iraq, Kuwait, and the UAE using ships with transponders turned off. Furthermore, reports of ongoing US-Iran talks to broker a peace agreement have added to hopes that negotiations could end the war. As quoted by the Financial Times in a Friday report, Tehran has put forward a fresh seven-day cessation-of-hostilities proposal that would include signing the MoU made in June and opening the Strait of Hormuz. However, uncertainty remains high, particularly considering the recent reports by the Saudi Arabian authorities of their interception of a fresh wave of missiles fired by Houthis from Yemen. The possibility that any one of the attacks may damage Saudi Arabia’s oilfields is likely to keep crude prices from falling quickly. Earlier in the week, US data showed that Oil inventories rose by 2.96 million barrels in the week ending September 19, compared to market forecasts of a 700K drawdown and after a drop of 640K in the prior week. This has helped keep a lid on the Oil rally seen during the week. Technically, crude oil prices remain positive on the 4-hour chart in the short term, having held above the 200-period SMA support level and the 38.2% Fibonacci retracement from the July-September rally. However, the MACD indicator is positive, and its histogram is moving higher, even as the RSI oscillates near the neutral 47 level. Thus, any additional decline will find solid support near the 200-period SMA at $88.99, quickly followed by the 38.2% Fibo. Retracement level at $88.59. More pronounced declines may face further buying interest near the 50.0% Fibo level at $84.47, followed by $80.35, $74.48, and $67.01. Meanwhile, the nearest resistance is seen near the 23.6% Fibonacci level at $93.68, a breakout of which would target higher prices toward the recent cycle highs.