Crude Plunging On US/Iran Peace Hopes
Peace Hopes Return
Crude prices are continuing to push lower on Tuesday with the futures market now down at its lowest level since mid-August. The continued slide comes amidst rising optimism over diplomatic efforts to end the conflict between the US and Iran. Trump yesterday expressed his hopes that the conflict can soon be brought to an end and cited ‘momentum’ in negotiations on the back of his recent meeting with the prime minister of Qatar. Separately, there are reports that the Democrats are considering using a December govt shutdown to coerce Trump into ending the war. As such, there has been a shift in sentiment recently with traders now once again eyeing a possible end to the conflict on the horizon.
US/Iran Fighting Continues
Despite this optimism, fighting between the US and Iran continues this week with the US reportedly hitting Iran’s Qeshm Island again. Still, given the price action we’re seeing in crude today it seems that traders are looking beyond these attacks as just noise within what should ultimately prove to be the path to the end of the conflict. Perhaps the biggest catalyst here is the Democrat sweep in the US midterms which now creates serious headwinds for Trump and affords his opponents plenty of opportunity to pressure him into ending the war. Any further, encouraging headlines, should see oil prices continue lower near-term.
Technical Views
Crude
The sell off in crude has seen the market breaking down below the 87.55 level. This is an important development and with momentum studies bearish, focus is on a deeper push lower while we hold below that level with 77.65 the next target for bears.
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