Oil prices are on the brink of turning a negative performance into a positive one for this Monday’s trading day. Earlier, prices retreated as traders focused on Chinese demand fears and efforts to secure a ceasefire deal in Gaza. The US Dollar Index eased further as hedge funds went long on the Japanese Yen, which appreciated against the Greenback.
Oil is flat ahead of the US trading session, with risk factors that pushed prices lower on Monday not fading easily. Traders are concerned about weaker demand from oil importer China, weighing on overall market sentiment. Meanwhile, with focus on the Middle East, a successful outcome of Gaza ceasefire talks could significantly reduce supply risks, according to Reuters. With two major risk premium events priced out, further easing in crude prices might be anticipated.
The US Dollar Index (DXY) is facing pressure from the Japanese Yen, after hedge funds turned net long on the Yen for the first time since 2021. This has had a negative impact on the Greenback and the DXY performance, which is flirting with a break below 102 ahead of the Federal Reserve’s Jackson Hole Symposium later this week.
Crude Oil (WTI) is currently trading at $75.37, while Brent Crude is at $78.93. Factors affecting oil prices include the meeting between US Secretary of State Antony Blinken and Israeli Prime Minister Benjamin Netanyahu, where Israel expressed commitment to follow the US proposal on the table. Iran has increased the premium on its light crude prices for September sales to Asia, despite concerns about a slowdown in China. Hedge funds are still net long on crude oil, with potential for selling pressure if prices do not improve.
Oil output in Libya has increased by 300,000 barrels per day, with Waha Oil production back to normal levels after maintenance, according to Reuters. Ceasefire talks in Gaza pose a headline risk in the coming days, which could impact oil prices.
Technical analysis suggests that hedge funds may be in the driving seat for oil prices, with the inability to cross key technical levels signaling potential downside. Resistance levels pose a challenge for bullish moves, with key levels to watch for both upside and downside potential.
WTI Oil, a type of Crude Oil sold on international markets, is considered high quality and easily refined. Supply and demand, global growth, political instability, OPEC decisions, and the value of the US Dollar are key drivers of WTI Oil prices. Weekly Oil inventory reports published by API and EIA also impact prices, reflecting changes in supply and demand. OPEC decisions can also influence WTI Oil prices, with production quotas affecting supply levels.
