Crude Oil at a Critical Turning Point: With the $70 Support Holding, What Is the Market Betting On?
The two-week negotiation window between the United States and Iran has come to an end. Over the past two weeks, market expectations were highly optimistic—U.S. equities surged, and oil prices declined. Unfortunately, as the deadline arrived, weekend news suggested that the two sides failed to reach an agreement. The final outcome will only be confirmed once a formal agreement is signed. In any case, the key signal remains unchanged: when the strait is fully reopened, that will mark the true end of this event. All other news is merely noise.
There were earlier rumors suggesting that the U.S. proposed the two-week negotiation period as a cover to deploy additional military forces. If this proves true, further escalation of conflict cannot be ruled out. Investors should remain vigilant.
I. Can Crude Oil Still Rise?
If negotiations collapse, focus first on supply chain sentiment
The longer the strait remains blocked, the stronger the fear of supply shortages will become. Longer-dated crude oil contracts still have significant upside potential. After the blockade, oil prices broke above the $70 mark in one move, and the upward price gap remains intact. This indicates strong support at this level if the strait is not fully reopened. Meanwhile, longer-dated contracts have not deviated far from $70, suggesting favorable risk-reward. Traders may consider positioning in these crude oil futures contracts with $70 as a stop-loss level. If tensions escalate, there may be an opportunity to capture a second wave of price increases.
2. For CL09, $70 is the key level; the 10-week moving average is the tracking line
For CL09, if oil prices establish a bottom at this level, the support from the 10-week moving average would be confirmed. For trailing stop strategies, the 10-week moving average can serve as a reference to follow the trend.
II. The Strongest El Niño in 140 Years?
Weather rumors ignite agricultural commodities
Recent news has begun circulating about potential extreme weather this year—possibly the strongest El Niño in 140 years. This is a powerful narrative. Combined with high oil and fertilizer prices, it may create another wave of bullish momentum for agricultural commodities.
2. Watch equatorial heat first, then flooding in higher latitudes
El Niño primarily brings high temperatures to equatorial regions and can also trigger typhoons that affect agricultural production in these areas. In contrast, higher-latitude regions are more prone to flooding.
3. Drought in the southern United States is the first realized risk
Current early indicators show drought conditions in the southern United States, which are already impacting cotton production. It remains uncertain whether this will spread to other regions. If it extends into soybean and corn-growing areas, it could provide strong support for soybean and corn prices. Investors should continue to monitor agricultural products, with lagging commodities offering better tracking opportunities.
III. Caution Is Still Needed for Gold
Gold prices fluctuate with strait-related developments
Recent movements in gold prices have been highly correlated with news about the strait blockade. If the blockade continues, gold may face selling pressure from Gulf countries. Investors considering long-term gold holdings should remain cautious and observe further developments.
2. In a high-volatility downward channel, direction remains unclear
Technically, gold remains within a high-volatility downward channel. Despite large price swings, the overall trend is still unstable. Short-term traders may find opportunities to capture volatility by trading within defined ranges—buying near support and selling near resistance. However, the overall outlook remains uncertain, and stop-loss discipline is essential to avoid significant account losses due to large fluctuations.
$E-mini S&P 500 - main 2606(ESmain)$ $E-mini Dow Jones - main 2606(YMmain)$ $Micro E-mini Dow Jones - main 2606(MYMmain)$ $E-mini Nasdaq 100 - main 2606(NQmain)$ $Micro E-Mini Nasdaq 100 - main 2606(MNQmain)$ $WTI Crude Oil - main 2606(CLmain)$ $E-mini Crude Oil - main 2606(QMmain)$ $Micro WTI Crude Oil - main 2606(MCLmain)$ $Natural Gas - main 2605(NGmain)$ $E-Mini Natural Gas - main 2605(QGmain)$ $Gold - main 2606(GCmain)$ $E-Micro Gold - main 2606(MGCmain)$ $1-Ounce Gold - main 2606(1OZmain)$ $E-mini Gold - main 2606(QOmain)$ $USD Gold Futures - main 2605(GDUmain)$ $Silver - main 2605(SImain)$ $E-mini Silver - main 2605(QImain)$
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
