WTI Oil sell-off gets nearly fully erased at the start of the US trading session.
Oil prices earlier broke below the pivotal $83.34 level, heading abck to $82.00
The US Dollar Index pops back above 106.00 on upbeat Jobless Claims data.
Oil prices are erasing earlier losses after harsh rhetoric from Iran which said it is ready to respond when Israel should retaliate. More specific, Iran vowed to target several nuclear sites in Israel, which would mean substantial damage on the ground and in the region. Tensions and tit-for-tat headlines are spiraling yet again out of control, and the added sanctions from the US on Venezuela, Iran, and tariffs on China steel and aluminium are further driving up uncertainy and geopolitical tail risk.
The US Dollar, meanwhile, is having a change of heart as well, turning back in the green after yet again upbeat US data and beat on estimates across the board. Overnight several central banks had issued concerns on the strong US Dollar. In Asia the Bank of Japan and the Bank of South Korea even took it a step further and issued a joint statement saying that the strong US Dollar is messing with their measures to tackle inflation, and a joint invertention might be needed in order to limit the inflation inflow for their depreciating local currency against the Greenback.
Crude Oil (WTI) trades at $81.99 and Brent Crude at $86.73 at the time of writing.
Oil news and market movers: Slapping around
Recent data shows that Iran is exporting the highest amount of Oil in more than six years, the Financial Times reports.
China is set to have a surplus of Oil production, expanding to 82m tons by 2030, according to Li Ran, a researcher at CNPC’s Economics & Technology Research Institute. This surplus would make up for any shortfall in the markets from OPEC and other suppliers.
Leading Goldman Sachs Analyst Daan Struyven sees $90 as a ceiling for Brent Crude.
The recent Crude Oil Inventories report from the US Energy Information Administration (EIA) showed that the Gulf Coast stockpiles are at their highest level in a year. Us Inventories grew by 2.74 million barrels, the highest since June 2023.
Oil Technical Analysis: Anything but bearish
Oil prices are not rallying despite the current stance from the Biden administration with sanctions being slapped on Venezuela and are set to be issued for Iran, which should be rather supportive for Oil prices. On the production front, Iran is number 3 and Venezuela is number 9 on oil production volumes within OPEC. Sanctions on Iran thus might be having a heavier impact on prices than the ones for Venezuela, which means the Biden administration will probably sanction non-oil sectors in order to avoid disruptions in the global Oil supply.
With geopolitical tensions lingering, the $83.34 and $90 handle should remain in grasp. One small barrier in the way is $89.64, the peak from October 20. In case of further escalating tensions in the Middle East, expect even $94 to become a possibility, and a fresh 18-month high could be on the cards.
On the downside, $80.63 is the next candidate as a pivotal supportive level. A touch softer, the convergence with the 55-day and the 200-day Simple Moving Averages (SMAs) at $79.88 and $79.57 should halt any further downturn.
US WTI Crude Oil: Daily Chart
