Forex▼ Bearish
Oil Retreats as Traders Bet on U.S.-Iran Talks; Dollar Firms
Crude oil fell as traders focused on potential U.S.-Iran negotiations, while the dollar gained after retail sales met estimates. Natural gas storage data came in below consensus.
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Oil prices fell sharply on Thursday as traders looked past the latest round of U.S.-Iran hostilities and focused on the possibility of negotiations. WTI crude dropped 2.3% to $78.40 a barrel, while Brent settled at $84.20, down 1.8%. The move came despite Iran's threat to keep the Strait of Hormuz closed and the U.S. naval blockade of Iranian ports.
“The market is pricing in a resolution, not an escalation,” Vladimir, an independent trader with 18 years of experience, said. “Traders are betting that both sides will come to the table soon.”
The selling pressure extended to natural gas. The EIA reported a storage build of 41 Bcf for the week ended June 2, below the consensus estimate of 43 Bcf. Inventories stood at 2.74 trillion cubic feet, 21 Bcf below last year's level but 181 Bcf above the five-year average.
Natural gas futures slipped 0.7% to $2.85 per million British thermal units. Vladimir noted that the next support zone sits at $2.75–$2.80. A break below that would open the path to $2.50–$2.55.
WTI crude failed to hold above the $80–$80.50 resistance area and is now testing the $79 level. If that gives way, the next support is $74.50–$75.00, according to Vladimir. On the upside, a close above $80.50 would target the 50-day moving average at $84.66, then $86–$86.50.