Crude oil rose from the day’s lows as the market awaited further signs of supply as geopolitical conditions in Russia and the Middle East worsened.
Both crude oil contracts rose about 1% on Monday, as a series of strikes by US forces against Iran-backed Houthis in Yemen signalled continued geopolitical unrest in the Middle East. The US also warned of possible further attacks on the Houthis after the group threatened to continue attacking ships in the Red Sea. Houthi activity in the region has raised concerns about possible disruptions to oil supplies to Europe and Asia, which in turn have raised concerns about a tightening of global supplies.
The war between Israel and Hamas, at the heart of instability in the Middle East, also showed no signs of abating, as reports of a ceasefire appeared to be unfounded.
In Russia, according to media reports, Ukraine has carried out drone attacks against one of the country’s largest oil refineries, which is expected to weaken exports of petroleum products.
The expected fall in supplies could help offset lingering concerns about a slowdown in oil demand this year, especially amid China’s weak economic recovery and continued higher US interest rates. Fears of sluggish demand sent oil prices down more than 7% last week, largely erasing their 2024 gains.
Record-high output and production cuts in the United States by the Organization of the Petroleum Exporting Countries and its allies also raised questions about how tight oil prices will be. the oil market is in 2024.
This week the focus will be on new signals from Fed officials after the central bank and Chairman Jerome Powell largely supported keeping interest rates within a short-term bounding range.
Technical Outlook – Crude Oil:
Crude recovered from an intraday low of 6,025 to settle at 6,084. Prices received support from yesterday and recovered by almost 1.5%. It made a high 6136.
The formation of a higher penetration pattern on the above chart indicates an upward trend in the near future. However, ongoing geopolitical disruptions continued to create indecision among traders.
Currently at 6175, if immediate resistance is raised above that, prices may try 6250-6325.00. The downside is at 5920, below which prices may return to 5850-5480. So traders can go long above 6175.00 or wait for a decline to 5985-6000.00
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