WTI struggles around mid-$92.00s on US-Iran deal, recession concerns

WTI crude oil struggles to extend the previous weekly gains, taking rounds to $92.50 during Monday’s Asian session, as traders witness mixed catalysts. Among them, concerns surrounding the US-Iran oil deal and recession gained major attention.

“The US and Iran remain at loggerheads over key details of an emerging deal to revive a landmark nuclear agreement and may need several weeks to resolve their differences, according to officials familiar with the talks,” reported Bloomberg on Saturday. The news also mentioned that even if Washington and Tehran agree to revive the accord, implementing it will be a challenge, according to the European official, implying that a full Iranian return to oil markets would take months. 

Alternatively, multiple central bankers sounded hawkish, led by Fed Chair Jerome Powell, during the latest annual Jackson Hole Symposium event, paying little heed to the impending recession woes. With this, the economic slowdown fears join rate hikes and can underpin the US dollar, which in turn could exert downside pressure on the black gold.

On the same line could be the recent increase in the US-China tension, which in turn could raise worries over the oil demand. China's military said on Sunday, per Reuters, that it was monitoring US Navy vessels sailing through the Taiwan Strait, maintaining a high alert and ready to defeat any provocations.

Elsewhere, Reuters cites multiple sources to mention the likelihood of the output cut by OPEC and its allies when and if Iranian production returns depending on the revival of the nuclear deal. During the last week, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said that OPEC and its allies (OPEC+) may be compelled to reduce oil production.

To sum up, the likely delay in the US-Iran oil deal and OPEC+ output cut could join the looming economic fears to entertain WTI traders. However, the US dollar strength appears the key catalyst to watch, which in turn highlights Friday’s US jobs report for August as an important factor for near-term directions.

Technical analysis

Contrary to the fundamentals, Friday’s Doji candlestick above the 21-DMA, at $90.78 by the press time, could help WTI crude oil buyers again poke the 50-DMA hurdle surrounding $96.10.