Oil Prices Plunge as Pentagon Suspends Bombing Campaign

Oil prices plummeted by roughly 7% in West Texas Intermediate as Brent fell further. This collapse occurred just one day after it was announced that the Pentagon had suspended its bombing campaign against Iran, and President Trump ordered the military not to carry out strikes already approved.

The sequence of events is crucial here, as oil prices began to rally three weeks ago without a pause but eventually ran into resistance at a strong level formed by Fibonacci retracements and the June highs. The breakout above this line was short-lived, and prices fell back below $90 on Friday despite the escalation of tensions in the Middle East.

Przemyslaw K. Radomski, CFA, notes that when he wrote about the resistance area on Thursday, he had no knowledge of the impending bombing campaign halt. The fundamental situation fully supported the rally at that time, but it was the chart that beat the news.