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Crude Oil Price Eases As US-Iran War Threats Dissipate

crude oil prices
crude oil prices

Crude oil price (Brent Crude) is trading markedly lower as the threat of an all-out war has dissipated in the last 24 hours. US Vice President Mike Pence indicated in a Fox News interview on Thursday that the latest intel available to the US is that Iran is asking militias not to conduct attacks on the United States. The VP reiterated statements from the POTUS, saying that the US was “ready to respond militarily” if there were any such strikes.

Similarly, Iranian state TV quotes senior Iranian Commander Hajizadeh as saying that the aim of the missile strikes was to cause damage to US military architecture and not to target the lives of US servicemen, Hajizadeh added that expelling US troopls was the appropriate revenge for the killing of General Soleimani.

Market players are viewing these statements, especially the ones from the Iranian side, as a toned down version of the revenge rhetoric that came from top members of the Iranian regime. This appears to have cooled the markets.

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Technical Outlook for Brent Crude

Brent crude is currently trading at 65.40 as at the time of writing, well down from weekly highs of 71.85 as the threats of war and possible disruptions of crude oil supplies in the Middle East wane. Broader market outlook continues therefore to remain bearish.

The weekly chart shows that the downward slide in crude oil price for Brent has caused the weekly candle to retreat from the channel’s return line (upper border) to the channel’s trendline (lower border). This is therefore the initial test of support formed by the channel’s lower border to be seen this week. A confirmed break of the lower channel border by a 3% penetration takes price down below support at 63.71. It also opens the door for possible attainment of 60.66, with the possibility of a further drop to 57.47 if de-escalation continues.

A bounce on the channels’s trendline targets 66.98, and must breach this level if price is to continue upwards to retest the upper channel border above $71.

Get a glimpse of broader crude oil market outlook here.