Oil Price Analysis: on the defensive after rising wedge breakdown

Omkar Godbole FXStreet Contributor

WTI oil could be in for a price pullback, having witnessed a downside break of the rising wedge pattern on Tuesday.

As of writing, oil is trading at $69.24/barrel. The front-month contract clocked a high of $69.80 yesterday before closing at $69.05.

OIl prices reported modest gains on Tuesday, courtesy of Iran sanctions and drop in US oil stocks.

The American Petroleum Institute (API) reported yesterday a crude oil inventory draw of 6 million barrels of United States crude oil inventories for the week ended Aug 4.

Having introduced the first batch of sanctions against Iran on Tuesday, the US government now looks set to target Iran's energy sector in November. The resulting drop in Iranian supplies, a major exporter of crude oil, could push prices well above $80.00 unless there is evidence of OPEC, Russia and/or the US compensating for the loss in Iranian oil supplies.

It is worth noting that US oil supplies had flooded Italy in July as the unrest in Libya had cut off its deliveries to European nations. Clearly, the US oil industry is now able to serve as an alternative source of light, sweet crude.

Hence, oil traders would focus on the official US fuel storage data, scheduled to be released later today by the Energy Information Administration (EIA). Oil prices may drop sharply if the EIA data shows a big jump in oil inventories.

Hourly chart

The rising wedge breakdown indicates the corrective rally from the Aug. 2 low of $66.90 has ended and has poured cold water over the optimism generated by last Thursday's big bullish outside-day candle.

The bearish pattern has opened the doors to re-test of the Aug. 2 low of $66.90.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.