Crude oil prices are reversing gains made during a two-day rally on Wednesday. This decline follows a report from the American Petroleum Institute (API), which indicated a larger-than-expected rise in U.S. stockpiles. In the Middle East, U.S. Secretary of State Antony Blinken called on Israel to avoid escalating tensions with Iran. Speaking in Tel Aviv, Blinken noted a potential opportunity for a hostage agreement, which could ease recent tensions between Israel and Iran.
The U.S. Dollar Index (DXY), which measures the dollar’s strength against six other currencies, has increased, surpassing 104.00. Markets are preparing for a significant week, with the U.S. presidential election set for November 5 and the Federal Reserve’s interest rate decision scheduled for November 7. As traders and investors shift their focus from bonds and equities to the dollar, the greenback is regaining prominence. At the time of writing, West Texas Intermediate (WTI) crude oil is trading at $71.35, while Brent crude is at $75.30.
Key Oil News and Market Movers
The API reported that U.S. stockpiles increased by 1.643 million barrels, exceeding the anticipated 0.7 million barrels. Last week, there was a draw of 1.58 million barrels. The Energy Information Administration (EIA) is expected to release its stockpile figures at 14:30 GMT, with analysts predicting a modest increase of 0.7 million barrels following a substantial drawdown of 2.191 million barrels the previous week.
Secretary Blinken engaged in detailed discussions with Israeli Prime Minister Benjamin Netanyahu and other senior officials. He urged Israel to facilitate more humanitarian aid into Gaza, according to a senior State Department official confirmed by Reuters.
Oil Technical Analysis: A Critical Week Ahead
Crude oil briefly rose above $70.00, but ongoing oversupply continues to weigh on prices. If the EIA’s stockpile numbers reveal a larger-than-expected increase, oil prices may struggle to maintain their current levels, potentially falling back to $70.00 or lower.
The road to recovery for crude oil appears challenging in the coming days. The crucial resistance level is $71.46, which held firm during price drops on October 14. A daily close above this level is necessary for a bullish outlook. If this is achieved, traders will then focus on the significant technical hurdle at $75.13, where the 100-day Simple Moving Average (SMA) and other key indicators converge.
On the downside, traders should monitor the $67.12 level, which provided support in May and June 2023. If this support fails, the year-to-date low of $64.75 could be at risk, followed by the 2023 low of $64.38.
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