Looking to the Futures

Crude oil erased its early morning gains on Thursday as optimism surrounding a potential peace deal with Iran sent prices lower for the second consecutive day. Front-month July futures (/CLN26) sank -1.94%, settling at $96.35. With narratives around the conflict seeming to shift by the hour, markets continue to experience the sharp intraday swings traders have recently grown accustomed to.

Early in the session, reports of an intensifying standoff between the U.S. and Iran over key aspects of a deal pushed oil prices above $100 per barrel, with gains exceeding 3% at the stock market open. The rally was driven largely by headlines suggesting Iran’s Supreme Leader would not agree to sending enriched uranium out of the country. However, that move quickly reversed as new developments emerged.

Prices collapsed later in the morning following reports that the U.S. and Iran were closing in on a potential agreement that could restore normal crude flows. According to sources, the latest U.S. proposal has “narrowed the gaps” between the two sides and includes a short-term framework to reopen the Strait of Hormuz and lift the U.S. blockade of Iranian ports. Such measures could temporarily ease energy constraints while negotiations over Iran’s nuclear program continue.

Despite these developments, mixed messaging remains a key driver of volatility. While Washington has stated negotiations are in their “final stages,” Iran continues to maintain that enriched uranium will not leave the country. As a result, crude prices have remained elevated, yet capped, as markets await further clarity.

Fundamentally, supply concerns persist. The International Energy Agency warned this week that oil markets could soon enter a “red zone” as global inventories decline heading into the summer demand season. IEA Executive Director Fatih Birol noted that developing economies, particularly in Asia and Africa, are likely to feel the “biggest pain” from tightening conditions.

Wednesday’s EIA report reinforced this theme, showing U.S. crude inventories at -1.7% and gasoline inventories at -4.6% below their seasonal five-year averages as of May 15. U.S. crude production also dipped slightly, falling -0.1% week over week to 13.702 million barrels per day.

In broader markets, equity futures finished higher, with S&P 500 futures gaining 1.08%, Nasdaq futures up 0.19%, and Dow Jones Industrial futures rising 0.57% to close just below all-time highs. Treasury yields edged lower, with the 10-year declining 1 basis point to 4.564% and the 30-year falling more than 2 basis points to 5.09%, after recently touching its highest level since before the financial crisis above 5.19%. Market focus now turns to further developments on the Iran deal and the expected swearing-in of new Federal Reserve Chair Kevin Warsh on Friday.

 

On the daily chart, July crude oil futures (/CLN26) declined for a second straight session, losing nearly 2% to settle at $96.35. Price closed below the 50-day simple moving average for the first time since April 17, a level that had provided consistent support over the past month. Prices also closed below the 20-day SMA for the second consecutive day, though they remain well above the 100- and 200-day averages.

Price action appears to be compressing into a tightening wedge pattern, with converging trendlines containing the movement relative to the broader volatility seen in recent weeks.

The 14-day RSI finished at 47.7, signaling neutral to slightly bearish momentum just below the 50 midpoint. Volume picked up on Thursday, reaching a two-week high of 329,533 contracts, though still below the 50-day average of 340,016.

According to the Daily Hightower Report, /CL may find support at the 94.31 and 91.59 levels, with resistance at 101.21 and 105.38.
 

9-Day SMA:                    100.26

20-Day SMA:                  100.05

50-Day SMA:                   97.80

100-Day SMA:                 81.52

200-Day SMA:                 71.19

14-Day RSI:                      47.69

50-Day Vol Avg:               340,016

10:00 am ET - Consumer Sentiment (Final)

10:00 am ET - U.S. Leading Economic Indicators

10:00 am ET - Fed governor Christopher Waller Speech

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