The Crude oil price shrugged off inflation fears to finish the week on a positive note. WTI futures reversed three days of losses to close at $63.58.
Oil had been under heavy pressure for much of the week. Optimism that a deal to lift Iranian sanctions may be within reach, sent the Crude oil price lower by 8% from the recent high.
The talks, taking place in Vienna, aim to bring Iran back into compliance with the 2015 nuclear deal. Since 2018, Iran has violated the deal, which resulted in sanctions placed on the countries oil exports.
Iranian President Hassan Rouhani seems confident that the discussions are heading in the right direction, and said:
“All parties to the talks have agreed to lift all major sanctions on oil, petrochemicals, shipping, insurance, the central bank and so on,”
This reduced supply has been one of many drivers of the crude oil price rally over the last year. Iran is a major producer with the capacity to produce 4 million barrels of oil per day. Therefore oil traders will be closely monitoring the progress of the discussions.
However, this optimism was later downplayed by European delegates who suggested that obstacles still stand in the way of an accord.
This reversed the slide and sent crude futures sharply higher to finish Friday’s session well in the green.
Crude Oil Price Outlook
With the ongoing talks, it’s difficult to predict the effect the outcome will have on the oil price. Nonetheless, we can see some interesting developments from a technical perspective.
Oil had been testing the resistance of a descending trend line from the March high of $67.98.
The price briefly pierced the line on Tuesday’s rally to $67.02, however the crude oil price reversed and finished the day back below the trend line.
This reversal pushed the price below an ascending trend line, in place from the November 2020 low of $33.64. This has been strong support, and the breach attracted momentum selling.
The resulting decline saw the price back below the 50-Day Moving Average for the first time in a month.
Friday’s rally took the crude oil to $63.58 and well clear of the average at $62.62. The price is now reliant on additional positive news flow to clear the previous support line, which now offers resistance.
On the downside, the crude oil price has horizontal support at the March lows, around $57.50.
The result of the discussions will play a large part in where the crude oil price goes from here. And therefore, the best course of action may be to wait for a conclusion before committing to a position.
WTI Crude Daily Chart
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