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WTI hovers near $86.00 as traders seek more cues on Middle-East conflict

  • Crude oil prices retrace the recent surge; seeking more cues on the Israel-Hamas war.
  • Iran warned Israel that the situation could escalate if alleged war crimes are not halted in Gaza,
  • Softer outlook for the Chinese economy could help in dampening the Crude oil demand.

Western Texas Intermediate (WTI) oil price pulls back from the recent gains, trading lower around $86.00 per barrel during the European session on Monday. The current consolidation in crude oil prices suggests a wait-and-see approach among traders, anticipating more cues and developments related to the Middle East conflict.

The expiration of the evacuation deadline for residents of northern Gaza issued by the Israeli military suggests the potential for a large-scale ground assault. Iran has issued a warning, stating that if Israel's alleged war crimes and genocide are not halted, the situation could escalate with far-reaching consequences.

This heightened geopolitical tension raises the risk of a broader conflict in the Middle East, which could impact oil supplies from the world's top oil-producing region. Such developments are seen as a potential tailwind for Crude Oil prices, as concerns over supply disruptions contribute to market uncertainties.

An undisclosed source, as reported by Reuters, has indicated that discussions have occurred between US officials and Israel regarding the potential visit of President Joe Biden to Israel. The invitation for this visit is said to have originated from Israeli Prime Minister Benjamin Netanyahu.

The recent development involves the United States (US) taking a more stringent stance against Russia by imposing sanctions on two shipping companies. Russia is a major player in global crude oil exports, and increased scrutiny from the US on its shipments has the potential to impact the global oil supply.

The latest poll by Reuters indicates an expectation of a slowdown in China's economy during the third quarter. The forecast suggests a year-on-year GDP growth rate of 4.4%, down from 6.3% in the second quarter. Additionally, the quarter-on-quarter GDP forecast for Q3 is 1.0%. The poll anticipates China's economy to grow by 5.0% in 2023.

These data point to a progressively softer outlook for the Chinese economy, attributed to weakening domestic demand conditions. The potential impact is not limited to the domestic economy, as China is the largest oil importer globally.

The indecision regarding the Federal Reserve's (Fed) interest rates trajectory is contributing support in underpinning the Crude oil prices. During the previous week, Fed officials indicated a potential halt in a policy rate-hike cycle in November’s meeting as US bond yields surged to the highest since 2007, causing tightened financial conditions, is contributing to downward pressure for the USD.

The upcoming release of US Retail Sales (MoM) on Tuesday is anticipated to show a 0.2% rise in September compared to the previous reading of 0.6%, which could provide cues on the Fed’s interest rate trajectory.

WTI US OIL: technical levels to watch

Overview
Today last price85.95
Today Daily Change-0.56
Today Daily Change %-0.65
Today daily open86.51
 
Trends
Daily SMA2087.34
Daily SMA5084.92
Daily SMA10079.21
Daily SMA20077.6
 
Levels
Previous Daily High86.63
Previous Daily Low82.28
Previous Weekly High86.63
Previous Weekly Low81.45
Previous Monthly High93.98
Previous Monthly Low83.09
Daily Fibonacci 38.2%84.97
Daily Fibonacci 61.8%83.94
Daily Pivot Point S183.65
Daily Pivot Point S280.78
Daily Pivot Point S379.29
Daily Pivot Point R188
Daily Pivot Point R289.5
Daily Pivot Point R392.36

Author

Akhtar Faruqui

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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