Oil prices have retreated from a nearly five-month peak of $75.54 as geopolitical tensions in the Middle East appeared to ease. The U.S. administration indicated that immediate military action against Iran is unlikely, which has contributed to a more stable market outlook. Over the coming weeks, discussions related to Iran’s situation will be prioritized, reducing uncertainties that had previously supported higher oil prices.
In Friday’s Asian trading session, West Texas Intermediate (WTI) futures on the NYMEX managed to recover some early losses, rising to around $73.70. Initial declines in oil prices were influenced by comments from U.S. officials about the lack of immediate plans for a military strike on Iran. These statements have decreased anxiety around escalating conflicts in the region, instigating a pause in the recent oil price rally. Concurrently, demand for safe-haven assets, such as the U.S. Dollar, has moderated, with the Dollar Index drifting down to approximately 98.60 from a recent high of 99.15.
Market dynamics shifted on Thursday when reports suggested that U.S. officials might contemplate military action against Iran soon. However, the current price positioning of WTI Oil indicates a state of indecision among traders, as it forms an Ascending Triangle on the hourly chart. The critical resistance level lies at the June 13 high of $74.75, while the lower trendline originates from the June 16 low of $67.85, signaling an ongoing struggle for direction.
The 200-hour Exponential Moving Average, positioned around $70.00, indicates that the overall trend leans towards the upside. However, indicators such as the 14-day Relative Strength Index show volatility remains constrained, oscillating within the 40.00-60.00 range. Should oil prices clear the June 19 high of $75.54, they could potentially head towards the January 21 peak of $77 and the key psychological barrier of $80. Conversely, a decline below the June 18 low of $71.20 would likely result in further downward pressure, targeting the 200-hour EMA and the June 16 low of $67.85.
