Oil Price Rose On Supply Concerns

Fundamental Analysis

* Supply Fears: Oil prices continue to climb amid concerns over reduced supply, as major producers continued to enforce output cuts, coupled with signs of robust economic expansion in the United States, the world’s largest oil consumer. The oil price is boosted by Ukraine’s attacks on Russian refineries, disrupting fuel supply, and concerns about potential escalation of the Israel-Hamas conflict involving Iran, which could impact Middle East oil supplies. OPEC and its allies, including Russia, maintained their oil supply policy unchanged, urging better compliance with output cuts. Some members will compensate for oversupply, and Russia will focus on output cuts rather than exports. Meanwhile, Federal Reserve Chair Jerome Powell’s cautious stance on interest rate cuts, citing strong U.S. economic growth based on recent job growth and inflation data, was viewed positively for oil prices. On the other hand, Iran’s threat of retaliation against Israel for an attack that killed high-ranking Iranian military personnel adds to geopolitical tensions in the region, as Iran is a significant oil producer within OPEC.

Technical Analysis

* Technical Breakout: Crude oil price was traded higher while currently testing near the resistance level 86.15. MACD which illustrate diminishing bearish momentum signal suggest the commodity to extend its gains following a breakout.

* Resistance and Targets: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 88.15 after the price breach above the 86.15 level. Conversely, a failure to surpass the 86.15 level would indicate a technical retracement, potentially leading the price back to the support level at 84.35.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors remain focused on various factors such as demand and supply, global economy and especially Middle East tension. Although the ongoing conflict in Gaza has yet to notably impact on oil supply, there is evident market apprehension that further escalation could draw major oil-producing nations in the region into conflict.

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Monitoring

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.