- Over the weekend and in a historic first, the United States put to usage their bunker-buster missiles and conducted military strikes on three Iranian nuclear facilities, in order to dismantle Tehran’s nuclear program and prevent the regime from ever achieving nuclear proliferation.
- Via the usage of seven B-2 bombers, 125 aircraft, and more than 75 precision-guided weapons the US conducted the largest operational strike in its history and targeted the Natanz, Isfahan and Fordow facilities, damaging them severely and putting them out of operation according to US reports. The world then braced for Iran’s response. Israeli citizens headed for shelters and US bases across the Middle East stood on high alert.
- Oil futures rose quickly during the early hours of the market open and headed on to challenge the $78 per barrel peak, but shortly after Iran decided to symbolically strike a US base in Qatar with merely 7 missiles (signalling its unwillingness to prolong the conflict), the commodity’s price slumped by over 12% to finish the day deep in the reds.
- President Trump then triumphantly declared the end of the conflict between the two arch enemies across the Middle East, branded the event as the “12 Day War” and quickly moved on, vaporising concerns for a full-blown war in the region, dragging oil futures even lower to the $65 per barrel area.
- Since then, traders have been closely monitoring the state of the truce between the two nations, bracing for a possible flare-up of tensions, but, thankfully, so far both Israel and Iran appear to honour the truce, leading therefore to the stabilization of the oil commodity’s price at the aforementioned level.
Technical Analysis of Oil
WTI Chart – Negative momentum drives WTI prices closer to fresh 4 year lows
- Resistance: 68.50 (R1), 72.50 (R2), 77.60 (R3)
- Support: 64.50 (S1), 61.30 (S2), 58.00 (S3)
WTI futures are now attempting to consolidate and form base around the $65 per barrel area after the sharp correction since the announcement of the ceasefire between Israel and Iran, as traders await patiently for more developments in regards to the conflict. Given the correction, we are forced to alter our assessment from a bullish to a sideways bias, sitting on the sidelines, awaiting for a catalyst. Supporting our case is the RSI value of 46 signalling indecision (albeit the slightly bearish tilt) and the merging of the +DI and -DI, showcasing buying and selling pressures neutralizing each other. Should the bulls take the initiative, we may see the commodity climbing above the $68.80 (R1) resistance level and after a successful break and head on to challenge the $77.50 (R2) area. Should the on the other hand the bears take over, we would reasonably expect to see a break below, the closest line of defence at the $65.00 (S1) support level, and head south, towards the $61.30 (S2) support zone.
