Looking to the Futures

After what has been a turbulent past few weeks filled with mixed news messages regarding the conflict in Iran, Thursday proved to be no different. June crude oil futures (/CLM26) rose 3.11% on Thursday, closing at $95.85 per barrel while Brent crude oil futures (/BZ) rose 3.10%, closing at $105.07 per barrel. Crude opened lower to start the day as stock market indexes tested all-time highs but rebounded sharply later in the session. Reports that Iran's parliament speaker had resigned from the appointed negotiating team unsettled markets. With an already uncertain ceasefire in place, this news sparked further apprehension that Iran's Revolutionary Guard was taking firmer control.

Crude spiked nearly $4 in a matter of 45 minutes following the report before eventually cooling down. Prices have recovered over the past few sessions as continued gridlock around the opening of the Strait of Hormuz remains a major area of concern. Both the U.S. and Iran have continued to blockade the strait from both sides, despite optimism surrounding its reopening after the extended ceasefire was announced earlier this week. President Trump has now stated that the strait will remain blocked until he receives confirmation that Iran will reengage and agree to peace talks, while Iran has said it will not resume negotiations until the U.S. naval blockade is lifted. With both sides unwilling to budge, the stalemate at the strait appears to have no immediate end in sight.

Despite the rally during the session, oil prices closed off the highs due to a strengthening U.S. dollar, which reached a one-and-a-half week high, as well as positive developments regarding the Israel-Lebanon ceasefire. President Trump announced late Thursday afternoon that following talks held earlier in the day in the Oval Office between the two countries, a three-week ceasefire had been agreed to. This will serve to extend the ten-day agreement that was established last week. The U.S. Dollar Index ($DXY), which measures the value of the U.S. dollar relative to a basket of foreign currencies, closed the session at 98.82.

With each passing day that the Strait of Hormuz remains closed, the threat of a deepening global energy crisis continues to loom larger. Persian Gulf oil producers have been forced to cut production by nearly 6% as local storage facilities begin to reach capacity. As of last Monday, the International Energy Agency stated that roughly 13 million barrels per day of global oil supply have been shuttered due to the conflict and closure of the strait. The agency also estimated that more than 80 energy facilities have been damaged and that recovery of existing infrastructure could take as long as two years. Wednesday's EIA report showed that U.S. crude oil inventories as of April 17 were 2.8% above the five year seasonal average, gasoline inventories were 0.1% below the average, and distillate inventories were 7.5% below. U.S. crude production fell 0.1% week over week to 13.585 million barrels per day for the week ending April 17, slightly below the November 7 record high of 13.862 million bpd.
 

On the daily chart, June crude oil futures (/CLM26) extended their third consecutive session of gains on Thursday, settling up 3.11% at $95.85. /CL bounced strongly off its 50-day simple moving average on Tuesday and briefly rose above the 20-day SMA Thursday before closing just below it. Despite last week's abrupt pullback, price has recovered and appears poised to resume its upward trend, sitting just below the $100 level. The 100- and 200-day SMAs remain well below current prices and continue to trend higher.

The 14-day RSI finished at 53.2, signaling slightly bullish momentum while remaining near the midpoint between overbought and oversold conditions. Trading volume remained below the 50-day average of 442,037 contracts, with 345,751 contracts traded. According to the Daily Hightower Report, /CLM26 may find near term support at 93.81 and 90.01, with resistance near 99.89 and 102.18.
 

20-Day SMA:                    97.28

50-Day SMA:                    86.54

100-Day SMA:                  73.09

200-Day SMA:                  67.87

14-Day RSI:                      53.1808

50-Day Volume Avg:        442,037

10:00 AM ET: Consumer Sentiment (final)

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