Oil prices continued their downward trend on Tuesday, testing market belief and support for further upside. Traders seem to be disregarding recent events in the Middle East, such as the funeral of the Iranian President following a helicopter accident, and an international arrest warrant for Israeli leader Benjamin Netanyahu on war crimes charges. The US Dollar Index is also looking for direction, with markets in a state of uncertainty ahead of Nvidia earnings and a new batch of Federal Reserve speakers.
Crude Oil (WTI) is currently trading at $78.13 and Brent Crude at $82.41. Despite ongoing geopolitical tensions and warnings of possible retaliations in the wake of the Iranian President’s death, traders are keeping OPEC surplus in mind as they await the American Petroleum Institute’s release of the US crude weekly stockpile change numbers. US President Joe Biden has also expressed support for Israel amid the war crimes charges against its leader.
Oil prices are once again testing an upward-sloping trend line from the December low, with traders cautious about any potential disruptions to oil supply or global trade from the Middle East. The 200-day Simple Moving Average at $79.62 remains a key level of resistance, while $75.28 is the pivotal support level that could signal an accelerated sell-off towards $72.00 and $70.00. Further down, Oil prices could test $68, erasing gains made in 2024.
WTI Oil, also known as West Texas Intermediate, is a high-quality, easily refined crude oil sourced in the United States. It is one of three major types of crude oil along with Brent and Dubai Crude, and serves as a benchmark for the oil market. Supply and demand, global growth, political instability, OPEC decisions, and the value of the US Dollar are key drivers of WTI Oil price. Weekly inventory reports from the American Petroleum Institute and Energy Information Agency also impact price, with changes in inventories reflecting fluctuating supply and demand.
OPEC, a group of 13 oil-producing nations, collectively decide production quotas for member countries at bi-annual meetings. Their decisions often influence WTI Oil prices, as tighter supply from OPEC can push prices up, while increased production can have the opposite effect. OPEC+ includes ten non-OPEC members, with Russia being the most notable. Overall, the oil market continues to face uncertainty as traders navigate geopolitical events, global economic factors, and supply-demand dynamics.
