Crude Oil has seen an increase in price, accumulating an over 8% rise this week amid ongoing tensions in Lebanon and talks between the US and Israel regarding a potential attack on Iranian oil fields. The uncertainty surrounding this situation has led to a constant repricing of risk premium, with concerns about potential supply disruptions looming. As a result, the market has been on edge heading into the weekend and next week, as a ceasefire deal seems increasingly unlikely.
The US Dollar Index has experienced a significant rally over the past week, fueled by a stellar Nonfarm Payrolls report that exceeded expectations. The index is set to close out the week with a five-day winning streak, with the US Dollar strengthening by over 2% since Monday. The robust jobs report has caused traders to scale back expectations for Federal Reserve rate cuts, which could impact the demand and price of oil going forward.
The upbeat US Jobs Report has led to a reevaluation of Fed rate cut expectations, potentially diminishing the demand for oil as a result. However, the situation in the Middle East remains a key factor in oil price movements, with the possibility of Israeli retaliation against Iran’s recent missile attack on oil-related infrastructure. Further escalations could drive crude oil prices above $100 per barrel, according to analysts.
President Joe Biden’s comments on Thursday regarding Israel’s potential strikes on Iranian oil facilities have also added to the uncertainty in the market. The President’s refusal to comment on Israel’s requests has left many questioning the potential outcomes of such actions. The upcoming Baker Hughes Oil Rig Count release will provide further insight into the state of oil production in the Gulf region.
Oil Technical Analysis suggests that crude oil prices are currently at a pivotal level, with key moving averages serving as resistance and support levels. Any potential Israeli attacks on oil installations could drive prices towards the $75.00 level, while support levels are in place to provide a buffer against any downward movement. The ongoing geopolitical tensions are likely to continue to influence oil prices in the coming days.
Understanding the factors that drive WTI Oil prices is crucial for traders and investors looking to navigate the market. Global supply and demand dynamics, political instability, OPEC decisions, and the value of the US Dollar all play a role in determining oil prices. Additionally, weekly oil inventory reports from organizations like the API and EIA provide valuable insights into supply and demand trends that can impact WTI Oil prices. Keeping a close eye on these factors is essential for staying informed and making informed trading decisions in the oil market.
