Industrial Investment: After the oil price rebounded, it fell back, with short-term or volatile adjustments

International oil prices fell slightly in Asian trading on Wednesday, with WTI crude oil prices retreating to around $92.80 a barrel after a series of gains, and some market bulls chose to take profits. Oil prices had been significantly higher due to changes in the situation in the Middle East and concerns about supply disruptions, rising more than 3% in a single day. However, with news of a possible temporary understanding between the United States and Iran, market risk sentiment has eased, and some traders have begun to reassess the outlook for future crude oil supplies.

The US and Iran are currently pushing for an interim memorandum of understanding with the core goal of suspending broader tensions and resuming normal shipping in the Strait of Hormuz. The market believes that if the two sides can finally reach a preliminary consensus, the pressure on global energy transportation may be phased down, thus alleviating the rapid rise in oil prices caused by previous geopolitical factors. However, market concerns have not completely disappeared. The US military confirmed that it carried out defensive military operations in southern Iran, while the Iranian Revolutionary Guard said it responded to US warplanes and drones suspected of entering Iranian airspace. Later, the Iranian Foreign Ministry said to the outside world that the US action is a serious disturbance to the current fragile de-escalation situation.

The Strait of Hormuz is responsible for about 20% of the world's seaborne crude oil transportation. Therefore, even a slight change in the situation could quickly affect the stability of the global energy supply chain. The biggest concern in the market is that if the situation expands further, Iran may restrict some shipping activities in the Strait of Hormuz, thereby driving up global transportation costs and energy prices.

At the same time, Gulf states such as Saudi Arabia, Qatar and the United Arab Emirates are also actively pushing for a diplomatic solution. The market generally believes that these regional countries do not want further escalation of the situation, as any military expansion could affect the energy infrastructure of the entire Middle East and affect the stability of global oil exports. According toSociete Generale InvestmentObserve that if diplomatic efforts make progress, it is expected to ease short-term market tensions.

Marco Rubio, US secretary of state, said a final deal could still take days to finalise, as the two sides remained clearly divided over key issues such as asset freezes, security of passage through the strait and Iran's nuclear programme. Even if there were short-term signs of diplomatic de ́ tente, markets believed it would be difficult to resolve the core issues comprehensively.

Judging from the performance of the global market, the previous sharp rise in oil prices has begun to raise global inflation concerns. Investors are worried that if international crude oil remains high, inflation in the United States and major European economies may re-emerge as a rebound pressure, which will affect the future path of major central banks to cut interest rates.

The market expects that high oil prices may further extend the period when the Federal Reserve maintains high interest rates. This has also led to the recent strength of the dollar index, the simultaneous rise in US bond yields, and the increased volatility of global risk assets. Some funds have returned to safe-haven assets, while global stock markets have diverged.

From a technical point of view, the WTI crude oil daily chart still maintains a clear bullish structure, and the price continues to operate above the 50-day and 100-day moving averages, indicating that the medium-term upward trend has not been destroyed. The MACD indicator remains in the positive area, and the two lines continue to diverge upward, indicating that the market's medium-term buying power is still dominant. The RSI indicator is close to 70, indicating that the oil price has entered a stage of strong territory, but it also means that there is a certain technical correction demand in the short term. The preliminary resistance level above is concerned about the vicinity of $93.50. If it breaks through effectively, the market may further test the $95 or even $97 area. The important support levels below are located near $89.80 and $87.50.

The 4-hour chart shows that the short-term rally of WTI crude oil has begun to slow down, and some technical indicators have shown signs of high-level passivation. The MACD red column has begun to narrow, indicating that the short-term upward momentum is weakening. At the same time, the RSI indicator has fallen from the overbought area, and the market may enter a high-level volatility stage in the short term. If the US-Iran negotiations continue to send positive signals, oil prices cannot rule out a further correction to the vicinity of the $90 integer mark. But if the relevant situation in the Middle East changes again, or the transportation risk in the Strait of Hormuz intensifies, oil prices may strengthen rapidly again.

At present, the market focuses on the follow-up diplomatic negotiations between the United States and Iran, the shipping situation in the Strait of Hormuz and the changes in the US crude oil inventory data. In addition, the latest statement of the Federal Reserve on inflation risks may also affect the trend of the US dollar and the future direction of international crude oil prices.

edit summary

The current trend of international oil prices is not only affected by the fundamentals of supply and demand. Changes in the situation in the Middle East are once again becoming an important factor dominating the market. Although there are signs of a diplomatic detente between the United States and Iran, there are still major differences between the two sides on core issues such as nuclear issues, shipping safety and asset freezing, which means that future market volatility may still be obvious.

From the perspective of market logic, the strategic importance of the Strait of Hormuz determines that any related risks could rapidly push up global energy prices and further affect global inflation and interest rate expectations. In the short term, oil prices are likely to remain high and volatile, and investors need to focus on whether the situation in the region further changes, and the world's major economies' tolerance for energy price increases.

In the long run, if the situation in the Middle East continues to be unstable, the global energy market may re-enter a cycle of high volatility, and the high oil price environment may also increase the pressure on global economic growth and have a lasting impact on the future path of global monetary policy.