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Middle East Impact
It’s been a volatile start to the week for crude traders. Following a strong rally yesterday as traders braced for an Israeli retaliatory attack against Iran, crude prices have reversed heavily lower today. Crude futures are down more than 4% today as price pulls back from yesterday’s highs. The driver behind the moves looks to be a shift in perspective on the risks around the Israel – Iran conflict. Traders had been fearing the potential for a huge loss of supply in the event that Israel targets energy infrastructure in Iran. However, the market now deems that OPEC+ is more than capable of making up that supply given its current spare capacity of around 5 million barrels per day.
USD Impact
Looking ahead, the situation in the Middle East remains very precarious and crude prices are vulnerable to further volatility on incoming headlines. Alongside the developments in the Middle East, oil prices are also being impacted by the US Dollar. A stronger greenback on the back of Fridays jobs report is helping further cap crude upside here. Looking ahead this week, traders will be watching the latest FOMC minutes along with the September CPI report. If we see any fresh USD buying through these two events, oil prices should further retreat into the end of the week.
Technical Views
Crude
The rally in crude has stalled for now into a test 77.64 level. While price holds above 72.61, however, focus is on a continuation higher in line with bullish momentum studies readings. The next test for bulls will the bear channel highs along with the 82.59 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.