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Fading Middle East Tensions Weigh on Crude
Oil prices are turning lower as we cross through the middle of the week. Crude futures has slipped back to their lowest level since early March as a combination of fading Middle East tensions and a stronger Dollar weigh on sentiment. News that a ceasefire agreement between Hamas and Israel is now looking more likely has eased some of the market uncertainty which had been propping oil prices up. If a ceasefire is agreed, this will greatly dilute supply chain risks in the Middle East and should see oil prices weakening materially.
Hawkish Fed Risks
Along with developments in the Middle East, oil prices are also coming under pressure from a stronger US Dollar. Hawkish expectations ahead of the FOMC tonight are driving fresh USD buying. Traders are bracing for a more hawkish message from the Fed, potentially diluting September rate-cut chances, against a backdrop of still-high inflation and a robust jobs market. If the Fed does strike a more hawkish tone tonight, USD is likely to trade firmly higher, weighing further on oil prices near-term.
Crude Inventories Due
We also have the latest set of EIA crude inventories data due today. The market is looking for a drawdown of -2.4 million barrels. If seen this would clearly be bullish for the market though given what’s happening in the broader macro picture the data is likely to lose some impact today.
Technical Views
Crude
The sell off in crude has seen the market trading back inside the broken bull channel with price now pushing below the 82.59 level also. The bull channel lows will be next support to watch ahead of the 77.64 level support. With momentum studies bearish, a break below there opens the way for a test of 72.61 next.
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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.