Crude oil prices rose on Wednesday after hitting a low earlier this week. This increase follows strong comments from Israel’s opposition party. Yair Lapid, the leader of the Yesh Atid Party, called for an immediate attack on Iranian oil fields. These comments, reported in the Jerusalem Post, go against the request from the US government not to escalate tensions. Such actions could worsen relations between the US and Iran and heighten the risk of a larger conflict.
The US Dollar Index (DXY), which measures the dollar’s value against six other currencies, reached a two-month high not seen since August. The dollar strengthened further after former US President Donald Trump gave an interview on Bloomberg. In this interview, he discussed his economic plans if he wins the presidential election on November 5. Traders are increasingly betting on a Trump victory.
As of now, crude oil prices are trading at $69.82 for West Texas Intermediate (WTI) and $73.83 for Brent crude.
Market News and Developments: US Defense Systems Deployed
The US plans to deploy its Terminal High Altitude Area Defense (THAAD) air-defense systems in Israel. The Biden administration aims to prevent a dangerous escalation that could lead to a full-scale regional war between Israel and Iran, according to Bloomberg.
In Libya, crude oil production is expected to increase to 27.52 million barrels in October, averaging 888,000 barrels per day, as reported by a loading program seen by Bloomberg News.
Crude oil prices remained stable during European trading on Wednesday. Uncertainty about the Middle East conflict and ongoing production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, set to last until December, continue to influence the market.
The American Petroleum Institute will release its weekly crude oil stockpile report at 20:30 GMT. Analysts predict an increase of 2.3 million barrels, which is significantly smaller than the 10.9 million barrel increase from the previous week.
Technical Analysis: Crude Oil Faces Challenges
Crude oil is attempting to hold above the $70.00 mark, but this will be difficult. With OPEC planning to increase production soon and overall supply remaining sluggish, there is limited potential for price increases. While geopolitical tensions have eased somewhat, they remain elevated, leaving traders seeking a stable value for oil, potentially below $70.00.
For crude oil to recover, it must regain the crucial level of $71.46, which previously provided support. A daily close above this level is necessary. If successful, the next significant hurdle will be the $75.35 mark, which aligns with the 100-day Simple Moving Average (SMA) and several important resistance lines.
On the downside, the $71.46 level has shifted from support to resistance. Traders should now monitor lower levels, particularly $67.11, which served as a support level from May to June 2023. If this level fails, the year-to-date low of $64.75 will come into play, followed by $64.38, the lowest point of 2023.
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