WTI oil price jumped on Monday, expressing strong concerns of market participants after peace talks between the US and Iran over the weekend failed.
Opening with a gap higher and above psychological $100 level, with the contract price gaining over 5% during early Monday trading, fades optimism for potential solution of the war in the Middle East that put the whole region in fire and threatens to spill over in a domino-effect.
Failure of peace talks and the latest threats of President Trump that the US will close the Strait of Hormuz, raises worries of stronger supply shortage, particularly following Trump’s comments that oil and gas prices will remain elevated through the US midterm election in November, as the latest calculations point to approx. 750,000 barrels per day supply shortage.
Analysts also expressed their worries about wider conflict as Trump said that the US army will close the way out of Hormuz to all ships, awaiting to see reaction from China, in such scenario.
Monday’s price rise hit over 50% retracement of $117.55/$91.09 bear-leg, signaling formation of a higher low and shifting near-term focus to the upside.
Daily studies remain predominantly bullish (strengthening positive momentum / MAs in almost full bullish setup) contributing to supportive factors from recent developments on the fundamental side.
Sustained break above cracked 50% retracement (104.32) to confirm strong bullish stance and expose targets at $107.44 (Fibo 61.8%) and $110.00 (round figure).
Near-term bias is expected to remain with bulls while the price holds above $100.
Res: 104.32; 105.62; 107.44; 110.00
Sup: 102.00; 101.20; 100.00; 97.38
