- WTI starts the week on a weaker note due to some profit-taking, although there is a lack of strong follow-through.
- Tensions in the Middle East, along with optimism regarding demand recovery, are providing support to crude oil prices.
- Traders are now looking to Fedspeak for potential market direction, although the primary focus remains on the Israel-Hamas conflict.
West Texas Intermediate (WTI) US crude oil prices begin the new week on a weaker note, moving away from the five-month peak above the $75.00 psychological level reached on Friday. The commodity has trimmed some of its modest losses during the Asian session and is currently trading in the $73.75-$73.80 range, down 0.35% for the day.
The intraday decline lacks a clear fundamental catalyst and is likely due to some profit-taking following last week's significant gains, which marked the largest increase in over a year. Meanwhile, the ongoing Israel-Hamas conflict shows few signs of de-escalation, and reports indicate that Israel is considering attacks on Iran's oil production facilities, raising concerns about potential supply disruptions from the Middle East. This situation is contributing to upward pressure on crude oil prices.
Additionally, the positive US monthly employment data released on Friday has bolstered expectations that the world’s largest economy is more resilient than previously thought. Furthermore, there are hopes that the recent stimulus measures from China will stimulate a lasting recovery and boost fuel demand in the world's largest oil importer. These factors serve as tailwinds for crude oil prices and may warrant caution for bearish traders anticipating a significant decline.
Looking ahead, there is no major economic data scheduled for release on Monday from the US. However, speeches by influential Federal Open Market Committee (FOMC) members could influence USD demand and impact USD-denominated commodities, including crude oil prices. Additionally, ongoing geopolitical developments in the Middle East are likely to create short-term trading opportunities in the oil market.
