Fresh US/Iran Deal Hopes

Oil prices are cooling slightly on Friday as traders once again showed optimism over a possible end to the Iran war, or at least an agreement over reopening the Strait of Hormuz. News broke last night that the US and Iran are considering a phased deal which could include the re-opening of the Strait of Hormuz in the near-term and the end of the US naval blockade on Iranian ports. Talks are underway on the sidelines of the UN General Assembly meetings in New York this week with Qatar helping mediate the discussions. While plenty of sticking points remain with regard to agreeing a full peace deal, talk of a more achievable phased deal looks to be resonating with traders given the pull back we’re seeing in oil today.

Crude Ends Week Lower

With today’s decline, crude futures are on course to end the week slightly lower as the reversal from the early September highs continues. Looking ahead, focus will be on incoming headlines regarding the phased deal and any sign that such a deal is looking more likely, should see crude prices pushing further lower. However, if talks fall apart again, crude remains vulnerable to fresh upside, particularity given that broader risk in the Middle East, such as the Houthi attack on Saudi Arabian continues for now, keeping supply risks alive there.  

Technical Views

Crude

The 95.06 level continues to hold as resistance for now and while it does so, focus is on a continuation lower with a test of the bull channel lows the next bear-target. With the 84.60 level sitting just below, this is a key support area for bulls to defend in order to maintain the broader bullish bias. If broken, focus turns to 77.65 as the deeper support level to watch next.