Oil Consolidating at Lows

Still no movement in oil prices as we move through the back end of the week. The market pushed heavily lower at the start of the week as traders eyed a stronger likelihood of the US/Iran war being brought to an end soon. While we’ve seen no follow through on that initial move, neither has the market bounced back suggesting that, for now, cautious optimism remains in place.

Conflicting News-flow

The problem for traders currently is the conflicting news flow around the war. Trump signalled earlier this week that there had been progress in negotiations with Iran and expressed optimism that a resolution could soon be achieved. However, Iran denied such talks taking place and has threatened to strike US military bases in Europe if Trump launched fresh strikes on Iran.

Uncertainty Around Trump

As such, there is still a great deal of uncertainty in the market and the risks of a further escalation in the conflict are clearly visible. Trump has reportedly been briefed on option for a new offensive against Iran after he ordered plans to be drawn up ahead of the midterms. The main issue for Trump now is the pressure he faces from the Democrat party who control both houses in Congress in stepping up his war efforts. This is perhaps why were seeing limited upside action this week. As such, focus for now is on a continuation lower for oil in response to any positive headlines.

Technical Views

Crude

For now, the market is holding below the 87.55 level after the sell off this week. While below this level and with momentum studies bearish, focus is on a continuation lower with 77.65 the next target for bears. Topside, 95.06 is the key level bulls need to reclaim to alleviate downside risks.