Oil prices are again rising
into triple digit levels due to the lack of any breakthrough in the US-Iran “negotiations”
and the increasing risk of an escalation over the weekend. Trump has been
jawboning prices throughout the entire week with ceasefire comments and claims
that Iran has been “begging” him for a deal. Meanwhile, the US military buildup
in the Middle East increased the speculations of a potential ground invasion.
Late yesterday, Trump
extended the ceasefire through April 6, right as major equity indices were on
the verge of breaking to new monthly lows and Treasury yields were pushing
toward fresh highs. He claimed Iran requested the extension, but the Iranians
denied such claim.
It looked like another
attempt to jawbone the market, but this time it didn’t have the same impact as
earlier in the week and the losses were quickly faded. We might see more
hedging into the weekend risk throughout the day which should keep oil prices
supported into new highs.
If we get a serious escalation over the weekend, we can expect WTI to open above the 120.00 handle and all the other markets in deep red. The probability of a recession at that point will be very high.
WTI crude oil – 4 hour
On the 4 hour chart, we can
see the slowly erosion of Monday’s losses as speculations of a potential ground
invasion increased. Unless Trump jawbones prices again or we get a clear breakthrough,
we can expect oil to rise back into the 102.00 resistance. If we get a pullback,
the buyers will likely lean on the trendline with a defined risk below it to
keep pushing into new highs, while the sellers will look for a break to
increase the bearish bets into the 78.00 support.
