Trump Says No Attacks Ahead of Midterms

Oil prices remain tightly congested ahead of the weekend. The futures market is a little softer today on the back of comments from President Trump yesterday who said that the US was engaged in productive talks with Iran and vowed to hold off on any fresh attacks until after the US midterms. The muted response in oil prices likely reflects a loss of market sensitivity given how changeable Trump’s messaging is. Earlier in the week Trump said that he wasn’t particularly interested in a deal with Iran amidst reports that he had asked the Pentagon to prepare attack options ahead of the US midterms.

Strait of Hormuz

For now, though, while US action is in more muted territory, focus is settling back on recovering supply levels in the Middle East and oil prices have room to drift lower accordingly. Still, the situation remains volatile and oil prices have seen upside spikes this week in response to news of intensified Iranian attacks on vessels in the Strait of Hormuz. With flows through the channel having recovered firmly recently, continue attacks could see traffic falling off again, leading to more sustained upside in oil prices. Additionally, if Trump renegues on yesterday’s vow not to attack ahead of the midterms, this could also see a fresh upside spike in crude. As such, plenty of upside risks remain near-term.

Technical Views

Crude

For now, crude prices are hugging the bull channel lows though still below 95.06. While that resistance holds, chances of a further downside move remain in view with 84.60 the next support to note. If we push higher again, however, 104.26 is the next bull target to watch.