Brent outlook: Oil price falls on fresh US-Iran peace deal optimism

Slobodan Drvenica Windsor Brokers

Oil

Brent price fell $7 on gap-lower opening on Monday, deflated by the latest de-escalation in the Middle East after President Trump called off the latest planned attack on Iran and announced fresh round of peace talks starting today.

Adding to renewed pressure on oil prices was decision of OPEC+ to increase production by 188.000 barrels per day from September.

Fresh optimism over potential peace solution for the war provided relief, as the price fell away from dangerous $100 zone which was violated on July 23/24 but without sustained break higher.

Markets remain cautiously optimistic after several attempts to stop the war failed and keep hopes that the US and Iran would this time reach a deal and prevent deepening crisis, which many analysts expect to be worse than the one in 2008.

The most sensitive points of all peace talks remain the situation of control of Hormuz strait and Iran’s nuclear program (red lines for Iran, but also key points for the US), with maximal demand from the US on these questions and Iran’s reluctance to compromise, warn that the whole process may fail again.

Daily studies weakened following a double rejection at $90 resistance zone (Thu/Fri) and subsequent acceleration lower, as south-heading 14-d momentum hits the centreline and the price broke below daily cloud.

Bears eye key near-term supports at $80.66/50 (July 28 low / 200DMA) and $80.00 (psychological) break of which to signal continuation of descend from 101.97 (July 23 peak) on completion of bearish failure swing pattern and unmask $70 zone (July 2 low / psychological).

Broken cloud base reverted to initial resistance ($83.48), followed by broken daily Kijun-sen ($86.05) which should cap corrective upticks.

Res: 83.48; 86.05; 86.70; 90.00.
Sup: 80.50; 80.00; 75.28; 71.92.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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