Today’s crude oil news looks quite interesting.
The price of oil rose by more than two percent on Monday. Prices rose to their highest in two months on expectations of increased demand during the northern hemisphere’s summer driving season and concerns that the conflict in the Middle East could spread and reduce global oil supplies.
Brent futures rose 1.9%, to settle at $86.60 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 2.3%, to settle at $83.38. MCX Crude settled at 6950, up 2.13%.
That was the highest close for prices since April 30 for a third day in a row and the highest for WTI since April 26.
Israel and Iran-backed Hezbollah have been trading fire since the start of the Gaza war, and concern is rising that an all-out war could break out between the two sides.
“Hezbollah and Israel seem to be drifting closer and closer to a full-scale war that runs the risk of drawing in OPEC member Iran and its Shiite allies in Iraq, Yemen and Syria,” Bob Yawger, director of energy futures at Mizuho, said in a note.
OPEC is the Organization of the Petroleum Exporting Countries (OPEC), which along with its allies, a group known as OPEC+, has already extended most of its oil output cuts into 2025.
Those output cuts have led analysts to forecast supply deficits in the third quarter as transportation and demand for air-conditioning during the summer eat into fuel stockpiles.
Rising demand for fuel helped lift prices for U.S. oil products by around 3% on Monday with diesel futures closing at their highest in 10 weeks and gasoline futures closing at their highest in eight weeks.
In the Caribbean Sea, Hurricane Beryl, an extremely dangerous major hurricane, was expected to pass Jamaica on Wednesday and slam into the Yucatan Peninsula in Mexico on Friday before weakening into a tropical storm and entering the Bay of Campeche in the Gulf of Mexico, where Mexico produces much of its oil on Saturday.
So far this week, the market received data showing U.S. manufacturing contracted for a third straight month in June as demand remained subdued, while a drop in a measure of prices paid by factories for inputs to a six-month low suggested that inflation could continue to subside.
As the week goes on, investors will be looking for more signs of when the U.S. Federal Reserve will start cutting interest rates.
The market will first focus on remarks from Fed Chair Jerome Powell on Tuesday, followed by the release of minutes from the U.S. central bank’s latest policy meeting on Wednesday and U.S. nonfarm payrolls data on Friday.
The Fed hiked interest rates aggressively in 2022 and 2023 to tame a surge in inflation. The higher rates boosted borrowing costs for consumers and businesses, which can slow economic growth and reduce demand for oil.
Hopes of an interest rate cut by the Fed and rising political concerns in Europe and between Israel and Lebanon’s Hezbollah group have also kept a floor under prices, Tony Sycamore, an analyst at financial services company IG, said in a note.
In France, opponents of the country’s far-right movement sought to build a united front to block the path to government of Marine Le Pen’s National Rally (RN) after it made historic gains to win the first round of a snap parliamentary election.
Focus now shift to the Federal Reserve Chair Jerome Powell’s remarks later on Tuesday and the latest central bank policy meeting minutes on Wednesday, as well as Friday’s nonfarm payrolls report to guide the rates outlook further.
Technical Outlook of Crude Oil
Crude oil jumped above 2% and settled at 6950 compared to the previous day’s close of 6805.00. Prices touched an intraday high of 6958.
On the above chart, a short-term consolidation breakout was noted, and prices forming a bullish candle stick. Both of which are indicating or a bullishness in a near future.
However, prices would need to cross key resistance 6960 in order to test next 7040-7080.00. Else, any short-term dip towards 6850-6825 could attract fresh buying activities.
On the downside, crucial support is seen at 6740 below it only prices could retreat towards 6650-6590 again.
Happy Trading!
Commodity Samachar
Learn and Trade with Ease
Also Read: Week’s Focus: FOMC Meeting Minutes, NFP Data and UK Election
Recommended Read: In Focus China’s Panda Strategy: Cute Gesture or Economic Marvel to Boost the Yuan?
Want help on your Trade?
Chat with our Analyst