Oil price falls to one-week low

Brent held in red for the second consecutive day and fell over 3% on Tuesday, as markets anticipated that the latest US strategy in imposing tough sanctions on Iran posses less risk to oil supply then military escalation,

Pullback from new peak at $94.81 accelerated on Tuesday and hit one-week low, generating initial bearish signal on penetration of daily cloud (spanned between $91.41 and $82.33) and break through psychological $90 support, pressuring pivotal Fibo support at $88.43 (38.2% retracement of $78.10/$94.81).

Weaker technical picture on daily chart (fading bullish momentum / price fell below 100 and 10DMAs) opens way for further easing, with sustained break below $90 level needed to verify initial bearish signal.

However, geopolitics are likely to play a key role in defining the price direction, with the latest story about massive sanctions, probably to be another verbal intervention from the US administration and likely to be offset by the fact that Hormuz strait remains closed for the most of the traffic and that most of western economies have already drained their reserves (including strategic reserves), suggesting that oil prices, unless significant changes occur, will likely continue to rise.

Res: 90.00; 90.87; 91.41; 92.87
Sup: 88.43; 88.00; 86.45; 85.85