ATFX: The ceasefire agreement is extended, and US crude oil actually achieved three consecutive gains?

ATFX: On Wednesday, the international market did not see the resumption of hostilities between the US and Iran. Instead, it received Trump's statement about "indefinitely extending" the ceasefire. Trump also said that Iran is already "severely divided" internally, and that we are giving them time to "sort things out."

The stance from the Iranian side paints a different picture. Senior Iranian officials stated that Iran never requested a ceasefire, that many of its citizens disagree with a ceasefire, and that they demand to press the advantage.

There are two interpretations of the discrepancy between US and Iranian statements. The first interpretation is that Trump is talking to himself, unilaterally announcing an extension of the ceasefire without obtaining Iran's agreement. The second interpretation is that there is already a breakdown in effective communication between Iran's internal decision-makers and its public-facing officials, which aligns with Trump's claim of internal division.

For the international crude oil market, neither interpretation changes the current reality of conflicting statements. The US continues its military blockade of the Strait of Hormuz, preventing the smooth passage of cargo ships and oil tankers. The supply side of the international crude oil market remains tight.

▲ATFX Chart

The chart above shows the curve of the US Strategic Petroleum Reserve (SPR). It has shown a clear decline over the past six years, hitting a cyclical low in mid-2023, when the total strategic inventory was about 346 million barrels. The SPR rebounded over the past three years, but starting in February this year, the curve shows signs of turning downward again. The reason is very clear: the war between the US and Iran has led to high oil prices, forcing the US to release strategic petroleum reserves to stabilize the supply side.

A simple logic is: as long as the US Strategic Petroleum Reserve does not stop falling and rebound, the supply in the international crude oil market will remain tight, and it will be difficult for international oil prices to break below key support levels.

Most countries have released their March year-on-year CPI data. The US surged from 2.4% to 3.3%, and the Eurozone from 1.9% to 2.6%, indicating that international oil prices are having a significant impact on consumer daily life. If the stalemate between the US and Iran persists long-term, and international oil prices fail to break below the symbolic $90 per barrel mark, inflation in the US and Europe could spiral out of control again.

Donald Trump also faces the mid-term elections in November, where high inflation and the quagmire of war could significantly drag down Republican support. Given such severe consequences, we believe Trump is highly unlikely to escalate military actions against Iran into a prolonged confrontation.

▲ATFX Chart

Regarding the price chart, the latest mid-term high resistance level for international oil prices is 106.6, and the latest mid-term low resistance level is 75.93. Looking only at the chart above, one might think 78.86 is the new mid-term low. However, since 78.86 still requires confirmation by a right-sided bottoming pattern, it cannot currently be considered a mid-term low. Considering the downward pressure from the 106.6 level above, the space for forming a significant right-sided bottoming pattern is greatly compressed. There is a high probability that 78.86 will be broken to the downside in the future, negating its status as a mid-term low.

ATFX Risk Warning, Disclaimer, Special Statement: The market involves risks, and investment requires caution. The above content represents only the analyst's personal views and does not constitute any operational advice. Do not treat this report as the sole reference. The analyst's views may change over time, and updates will not be notified separately.