Brent Nears $100 as Hedge Funds Cut Longs; Trump Mentions Iran Deal

Brent crude traded around $104.70 on May 22, slipping below the 20-day exponential moving average of $105.41 and moving toward the lower trendline of an ascending channel that has contained gains since April 17.

President Trump told the country this week the Iran war would end “fast” and said oil prices would fall sharply once a deal is reached. The remarks removed part of the geopolitical risk premium that had been supporting crude since April.

The Commodity Futures Trading Commission’s report on non-commercial crude positions shows net speculative positions peaked at 233,600 contracts in the week ending March 28 and fell to 169,900 in the May 16 release, a decline of 63,700 contracts, or 27 percent, over seven weeks.

Options activity on BNO, the U.S.-listed Brent ETF, indicates increased demand for downside protection: the put-call volume ratio rose from 0.15 on May 15 to 0.30 on May 21.

On the chart, the next technical area of interest centers on the $100 level. The 50-day exponential moving average sits at $100.27 and overlaps the 50 percent Fibonacci retracement at $100.83. A clean break below $100 would confirm a breach of the channel and point to a measured move target near $86.37. Intermediate support levels between current prices and that target include $97.42 and $92.56. The 200-day EMA is around $82.43, and a 1.618 extension projects to about $68.49.

Market participants remain net long overall, but directional conviction has weakened. Reclaiming $108.47 would be an important step for bullish traders, while a daily close above $115.30 would remove the current bearish technical setup.

The president’s comments, the reduction in net long positions reported by the CFTC and the rise in put buying coincide with the price test at the channel’s lower boundary, placing the $100 area as the next major technical test for Brent.