- Crude Oil jumps as Russia retaliates to Ukraine's missile attacks by launching an intercontinental ballistic missile for the first time in the conflict.
- The International Criminal Court in The Hague issues an arrest warrant for Israeli Prime Minister Benjamin Netanyahu.
- The US Dollar Index seeks direction as a dovish Federal Reserve and safe-haven inflows drive the DXY in opposing directions.
Crude Oil prices are surging above $70 following headlines that the International Criminal Court (ICC) in The Hague has issued an arrest warrant for Israeli Prime Minister Benjamin Netanyahu. On Wednesday, oil attempted to break the $70 level but failed after reports emerged that Ukraine and Russia might be open to talks to resolve the ongoing conflict. Any developments hinting at such negotiations could trigger volatile reactions in oil prices.
Meanwhile, the US Dollar Index (DXY) remains flat, influenced by safe-haven inflows due to the Russia-Ukraine war. At the same time, dovish comments from New York Fed President John Williams, suggesting that inflation will continue to decline and interest rates should follow suit, have added to the indecisiveness in the DXY. The combination of these factors, alongside disappointing Nvidia earnings, has left the US Dollar Index stagnant.
At the time of writing, Crude Oil (WTI) is trading at $69.92, and Brent Crude is at $73.71.
Oil News and Market Movers: Middle East Tensions Rise
- Despite rising oil prices, the options market does not reflect immediate concerns, suggesting that the market does not foresee further escalation in the near term.
- The Biden administration has recognized opposition leader Edmundo González as Venezuela's president-elect, which may complicate efforts for the incoming Trump administration to negotiate with Nicolás Maduro. Venezuela, holding the world’s largest oil reserves, is a significant player in the global oil market.
- US crude oil inventories rose for the third consecutive week, as a rebound in oil exports offset a large influx of imports into the Gulf Coast, according to the latest weekly report from the Energy Information Administration (EIA).
- China’s consumption of fuels like gasoline, diesel, and jet fuel is expected to decline to 390 million tons, as new energy vehicles and LNG trucks begin replacing traditional fossil fuels, according to a CNPC in-house newsletter.
Oil Technical Analysis: Price Hits a Barrier
While Crude Oil prices are rising due to geopolitical tensions between Russia and Ukraine, the market remains cautious as supply still outweighs demand, keeping the long-term outlook relatively unchanged.
On the upside, the immediate resistance is at the 55-day Simple Moving Average (SMA) around $70.08, followed by the 100-day SMA at $72.89. The 200-day SMA at $76.48 is still distant, though it could be tested if tensions escalate further.
To the downside, the first support level to watch is $67.12, which held the price in May and June 2023. If this breaks, the year-to-date low for 2024 at $64.75 will come into play, followed by $64.38, the low from 2023.
