Crude oil prices fell more than three and a half percent on Friday. Prices fell to their lowest since mid-June as investors anticipated a possible cease-fire in Gaza, while a stronger dollar continued to weigh on values.
US Secretary of State Antony Blinken said a long-awaited ceasefire between Israel and the Palestinian group Hamas is on the horizon. The war in Gaza has led investors to price in a risk premium when trading oil, as tensions threaten global supplies.
If a ceasefire is reached, the Iran-backed Houthi rebels could ease their attacks on commercial vessels in the Red Sea, since the group declared the attacks in support of Hamas.
The United Nations’ highest court said Israel’s occupation of Palestinian territories and its settlements there are illegal and should be withdrawn as soon as possible, further buoying hopes of an end to the conflict.
Further, The U.S. dollar index climbed after stronger-than-expected data on the U.S. labor market and manufacturing this week, added pressure. A stronger U.S. currency dampens demand for dollar-denominated oil from buyers holding other currencies.
Moreover, Chinese officials acknowledged the sweeping list of economic goals reemphasized at the end of a Communist Party meeting this week contained “many complex contradictions”, pointing to a bumpy road for policy implementation.
China’s economy grew by a slower-than-expected 4.7% in the second quarter, official data showed, sparking concerns over its demand for oil.
A global tech outage disrupted operations in multiple industries, with airlines halting flights, some broadcasters going off air and sectors from banking to healthcare hit by system problems. Meanwhile, two large oil tankers were on fire after colliding near Singapore.
Singapore is Asia’s biggest oil trading hub and the world’s largest bunkering port. Its surrounding waters are vital trade waterways between Asia and Europe and the Middle East and among the busiest global sea lanes.
Technical Outlook of Crude oil prices
Crude oil prices retreated from the day’s high of 6928 and dropped towards 6912, that was the lowest levels in a 7- week. Prices settled at 6725 compared to the previous day’s close of 6973, down 3.56%.
Formation of an evening doji candlestick on the above chart indicates a business in the near future. However, prices would need to break below the immediate support 6672 in order to extend the fall. Else, prices may stabilize in between the range of 6680-6850 in day’s to come.
On the downside, below 6672 next support is seen at 6550-6480. On the upside, immediate resistance is seen at 6880-6980.00.
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