Oil Price Slips Amid Ceasefire Talks, Demand Concerns

Fundamental Analysis

* Crude Collapse: The price of crude oil has dropped to a six-week low due to the anticipation of a ceasefire in Gaza and growing concerns about demand in China. In the Middle East, efforts to broker a ceasefire agreement between Israel and Hamas, based on a plan proposed by U.S. President Joe Biden in May and facilitated by Egypt and Qatar, have intensified over the past month. Israeli Prime Minister Benjamin Netanyahu informed the families of hostages held in Gaza that a deal for their release might be imminent, despite ongoing fighting in the Palestinian enclave. Additionally, mounting concerns about declining demand in China also weigh on the commodity as the country’s GDP growth fell short of expectations, with a reading of 4.7% compared to the anticipated 5.1%.

Technical Analysis

* Technical Breakout: Crude oil price was traded lower following recent breakout below the previous level 78.50. MACD which display bearish momentum signal coupled with bearish market structure breakout suggest the commodity to further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 75.30. Conversely, a potential reversal is also to be expected and the price could head towards 78.50.

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

Potential Risks

Moving forward, investors will closely monitor developments in the Middle East, as a successful ceasefire agreement could potentially lead to significant market volatility. Additionally, the market will focus on upcoming U.S. data, particularly the oil inventory report scheduled for release on Wednesday.

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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.