Oil News: Crude Straddles $69.11 Support as Geopolitical Calm Hits Premium

Crude Oil Prices Struggle as Key Support is Tested

Crude oil futures are showing slight gains on Tuesday following Monday’s steep sell-off. Prices attempted to hold above the key Fibonacci retracement level of $69.11, which has been a critical support in recent weeks. However, bearish sentiment dominates as geopolitical developments and technical indicators signal potential downside.

Fibonacci Levels in Focus as Volatility Persists

The market remains locked within the retracement zone of $71.53 to $69.11, a range it has tested consistently since mid-October. On Monday, crude rallied toward the 50% retracement level at $71.53 but failed to breach it, triggering an intraday decline to $69.11. Although sellers briefly pushed prices below this level, downside momentum failed to sustain, suggesting traders are closely watching for clearer signals.

Should prices decisively fall below $69.11, technical analysis points to further declines toward the $66.53 to $65.65 range. Adding to the bearish tone, crude remains below both its 50-day and 200-day moving averages, currently at $70.20 and higher, reinforcing the market’s technical weakness.

Geopolitical Uncertainty Weighs on Oil Premiums

A potential ceasefire between Israel and Hezbollah has significantly reduced crude’s geopolitical risk premium. Monday’s reports of an agreement between Lebanon and Israel led to a sharp $2 drop in both major benchmarks. Analysts suggest the market’s reaction to the ceasefire news was exaggerated, particularly as the Israel-Hamas conflict has yet to disrupt supply chains materially.

Iran’s role as a key crude producer in the region adds complexity. A stable Middle East could lower the likelihood of stringent sanctions on Iranian oil exports, which account for approximately 3% of global supply. Conversely, escalated tensions could tighten supplies if Iranian exports are curtailed by up to 1 million barrels per day.

Additional Pressures on the Market

In Europe, escalating hostilities in Ukraine, marked by renewed drone attacks on Kyiv, have kept Russian oil supply concerns on the radar. Meanwhile, OPEC+ may maintain existing production cuts at its upcoming meeting, reflecting ongoing demand uncertainty. The potential for U.S. trade policies, including tariffs on Mexican and Canadian imports, adds further uncertainty, though analysts doubt Canadian oil would be targeted due to its strategic importance.

Market Forecast: Bearish Near-Term Outlook

Traders should closely monitor price action around $69.11, as a sustained break below this level could signal deeper losses. While geopolitical developments remain fluid, the current bearish technical setup, coupled with softening global demand, suggests downward pressure is likely in the near term. Crude oil prices may rebound if risk sentiment shifts, but sustained gains will require a break above resistance levels, starting at $71.53.

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