Oil News: Bulls Defend Trend Line as Crude Oil Outlook Hinges on Demand and Iran News

Adam

Summary:

Oil prices steadied after a sharp drop as easing Donald Trump-Iran tensions reduced geopolitical risk; bulls are defending the key uptrend near $62, while demand prospects and supply factors still influence direction.

Crude Oil Holds Steady After Iran Headlines Trigger Shakeout

Light crude oil futures are trading flat on Tuesday after recovering from early session weakness. Yesterday, the market plunged more than 4% after U.S. President Trump said Iran was “seriously talking” with Washington, signaling a de-escalation of tensions with the OPEC member.

At 10:57 GMT, March WTI Crude Oil futures are trading $62.28, up $0.14 or +0.23%.

Traders Want More Details Before Bailing on Longs

Today’s price action suggests traders want to hear a little more about the chats between Iran and the United States, and that yesterday’s move was likely weaker longs getting spooked out of the market. It’s a pretty common pattern among traders — lighten up on the first headline, then wait for additional details. With the U.S. Navy still in the region and within striking distance of Iran, it’s still smart money to remain long at this time.

Strong Dollar and Supply Concerns Add Pressure

Traders are also reacting to a firm U.S. Dollar, which tends to curtail foreign demand for dollar-denominated crude oil. After heavy selling pressure dropped the dollar to levels not seen since 2022, it’s been rebounding since Friday when Trump nominated Kevin Warsh for chairman of the Federal Reserve. This is likely just a short-term move. Nonetheless, it comes at a time when demand is needed to use up some of the excess supply that is building.

Global supplies are also in the news with Russia saying it has sufficient volumes of fuel and may also be experiencing a fuel surplus. A new U.S. trade deal with India could also have an impact on supply, with India agreeing to buy oil from the U.S. and possibly Venezuela.

Trend Line at $62.13 Holds the Key

Daily March WTI Crude Oil Futures

Technically, the main trend is up according to the swing chart and the moving averages. Trend line support is being tested, with the market currently straddling an uptrend line at $62.13.

According to the swing chart, a trade through $66.48 will reaffirm the uptrend, and a trade through $58.53 will change the main trend to down. The swing chart has also identified potential support inside a retracement zone at $60.64 to $59.29.

The 200-day moving average at $60.64 is additional support, and the 50-day moving average at $58.85 is the main support.

What Happens Next

Looking ahead, buyers seem to be trying to reestablish support at $62.13. If successful, we could see a fast rally into $63.80.

If the trend line fails as support, then look for a possible plunge into the support cluster at $60.66 to $60.64. With the main trend up, look for buyers to show up on a test of this area.

The final support is a price cluster at $59.29 to $58.85. Buyers could show up on a test of this area too.

With the trend up and Iran still a hot spot, buyers could continue to come in on the dips as traders fish for value.

Source: fxempire

News, historical chart data, and fundamental company data are provided by FastBull Ltd.

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.