The price of West Texas Intermediate crude fell on Monday after hitting a marginal new high ($115.42) on the back of partial profit taking from a more than 13% rally in the previous trading session on Thursday.
Traders were cautiously optimistic and awaiting more details on possible peace talks between the US and Iran but remain on high alert about threats of further negative impact from prolonged supply disruptions, in a scenario of peace talks failing and conflict escalating.
The technical picture remains broadly bullish on the daily and weekly charts, with a large bullish weekly candlestick adding to the supporting factors, although overbought conditions warn of further headwinds that the bulls may face on the way towards initial targets at the $120 area.
Consolidation with limited declines (which would ideally be contained at the $105/$104 area) is needed to keep the bulls on a larger scale and mark a healthy correction to the recent high ($84.49/$115.42) before a new high.
Cautious about dips below the $100 psychological support (also 50% retracement at $84.49/$115.42) which could lead to a deeper pullback and expose the next major support at $97.00 (rising channel support line).
Accuracy: 113.94; 115.42; 117.08; 120.00.
SOP: 108.93; 106.82; 103.60; 100.00.
