Crude oil prices edged lower in the early hours of Monday trading, following the cooling down of war rhetoric in the Middle East over the weekend. CFDs on benchmark WTI Crude traded at $76. 43 per barrel, down -0.15% at 9.50 am GMT. Brent was going for $81.72, having shed -0.26% on the daily price chart. Nonetheless, uncertainties linger on in the oil-producing Middle East, making a case for a potential definitive price action later in the week.
Israel did not initiate a ground offensive on Rafah over the weekend as had been largely speculated. However, the world woke up to news of increased Israeli air raids on Rafah on Sunday night, raising the stakes further. Furthermore, Israel conducted a ground operation that rescued two hostages. Also, the Israeli military’s statement that it had “concluded” air strikes helped calm jitters in the oil market.
Meanwhile, Hamas has warned that a ground offensive on Rafah would “torpedo” the ongoing ceasefire talks. Elsewhere, shipping agency United Kingdom Maritime Trade Operations (UKMTO), has reported two missile attacks on a cargo ship 40 nautical miles south of Al Mukha, Yemen.
While the ship only suffered minor damage, with all crew safe, the attack could raise jitters over supply disruptions in the Red Sea. Oil prices will therefore continue to oscillate around the geopolitical developments in the Middle East during the week. Escalation of tensions in the region will provide upward momentum for the commodity.
The US dollar has been on a week-long consolidation, but that could come to an end when the January CPI data comes out tomorrow. A strong inflation data could propel the dollar higher, exerting downward pressure on the dollar-denominated oil. Traders will also borrow cues from the OPEC monthly report when it comes out on Tuesday. The report provides an outlook on the oil market and could inform widespread decision-making.
Crude Oil is currently pivoting around the $75.90 price, with the RSI lacking downward momentum. This setup will likely favor control by the bulls, with the first resistance likely to come at $77.30. A stable momentum could see the price break past the R1, possibly pushing the next target up to $78.10. However, a loss of momentum could see the price slide below the pivot, with the first support at $75.25. Further bearish movement below that level will invalidate the bullish narrative, with the support moving down to $74.60.
Oil price 30 minute chart
This post was last modified on %s = human-readable time difference 11:21