Key Points:
- WTI dropped nearly 8% to $91.20 on news that the US and Iran are preparing new peace talks in Pakistan.
- Buyers are defending the $90–$91 area, where a horizontal floor and the 200-SMA converge to form a base.
- Natural Gas ($2.59) is stuck in a downward channel, pressured by a 14% monthly decline and record US output.
Oil Retreats on Diplomacy Hopes as Supply Risks Still Hang in the Balance
Crude oil markets are slowly moving away from the panic-fuelled price surge we saw after the US blockade and rising geopolitical tensions… and that’s because diplomatic efforts are starting to calm things down a bit. Following on from the initial spike, traders are now taking a closer look at the likelihood of a prolonged disruption versus some kind of deal getting done. The prospect of renewed talks is starting to cool down the risk premium that sent prices soaring in the first place, which is making people more inclined to take profits and dial back on those long bets.
But at the same time, we still haven’t seen much of an improvement in the underlying supply situation. Routes are still pretty tight, and there’s still a lot of uncertainty around logistics, which is keeping the medium-term risk factor well and truly alive. This is creating a bit of a disconnect between the near-term sentiment, which is still really driven by headlines, and the fundamentals, which I’d say are still pointing to some pretty tight conditions.
