The price of crude oil was up more than two and a half percent, which was the highest in almost a month. Oil prices have continued to rise since the middle of the month, supported by the Middle East dispute and investor optimism that the US Federal Reserve will soon cut interest rates, boosting both global economic growth and fuel demand.
There was light trading during European trading, with some markets closed on public holidays. Prices rose after Houthi attacks on shipping disrupted global shipping and trade, while the conflict between Israel and Hamas shows no signs of easing. Despite concerns about the Middle East and the diversion of ships, actual supply has not yet been affected.
On Sunday, Maersk announced the resumption of shipping lines through the Red Sea, somewhat allaying concerns. Shipping companies stopped sending ships through the Red Sea and introduced additional fees for rerouting ships. The Red Sea connects to the Suez Canal, an important shipping route used for about 12% of world trade.
Germany and Hapag-Lloyd will decide on Wednesday how to proceed on Red Sea routes after the suspension of shipping, a spokesman said on Tuesday. A ship sailing off the coast of Yemen reported two explosions in the Red Sea on Tuesday shortly after spotting two drones, a British naval official said.
An Israeli minister suggested that the country is responsible for attacks against it in Iraq, Yemen and Iran, as the war with Palestinian militants led by Hamas in the Gaza Strip spreads to other parts of the region. Separately, the UN nuclear watchdog said Iran had reversed months of slowing its uranium enrichment to 60 percent, close to weapons-grade levels.
Oil was also supported by expectations that the Fed will cut interest rates next year. Lower interest rate interest rates reduce consumer borrowing costs, which can boost economic growth and demand for oil.
Technical Outlook
As of December 14, 2023, crude oil paused its decline and enjoyed a recovery. Prices turned positive from the June 2023 low of 5,658. Prices touched a high 6315 and rose 2.47% yesterday.
The appearance of a long ascending candlestick on the chart further indicates an upward trend in the near future. Moreover, prices break their short time consolidation zone and also support it.
Now, the top of 6360 acts as a major barrier and a break above will soon open the door to the next resistance at 6455-6550. Otherwise, prices may consolidate in between 5900-6020 levels.
Alternatively, the downside is at 6020, where prices will only fall to 5890-5750.
Hence, for a short term prospective traders can go long with a break above 6360 levels.
Commodity Samachar
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