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Oil prices experienced a rollercoaster ride, hovering near $86 after an initial surge. The US Dollar wrapped up the week with gains, but uncertainties loom.
Russia’s Levy Raise and Crude Exports
In a knee-jerk reaction, oil prices dipped as Iran heightened tensions, and Russia expanded its Crude exports. Russia’s decision to increase the export levy for November to the year’s highest level erased earlier gains in Crude oil. Iran’s comments regarding a potential political solution for Israel and Palestine’s ongoing conflict, along with the looming threat of an extended war, threw Oil Reserves traders into disarray.
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US Dollar Recovery and Market Pressures
The US Dollar’s recovery last week left traders and investors in a precarious position at the start of this week. Rising headline inflation pushed rates to 52-week highs. The uncertainty surrounding the Greenback’s future performance remains. Crude Oil (WTI) currently trades at $85.80 per barrel, while Brent Oil stands at $89.36 per barrel.
Developments in the Oil Market
- Russia’s export levy hits the year’s peak for the fourth consecutive month.
- Iran warns that the time for a political solution in the Gaza region is running out, raising the specter of an expanded conflict.
- The oil market’s fragility concerning the Gaza crisis remains a concern, with the possibility of a spillover proxy war if tensions rise, especially with the potential visit of US President Joe Biden to Israel.
- Despite a recent buildup in US Crude Stockpiles, it is insufficient to prevent a multiyear low, posing risks to the US supply chain.
- Global Crude Oil Reserves in stationary tankers for over seven days has dropped to 74.71 million barrels as of October 13, the lowest since December.
- Analyst reports suggest an unused supply surplus, which, if unleashed, could keep Crude prices below $100 for an extended period.
Oil Reserves Technical Analysis: Ongoing Uncertainty
Oil prices surged last week due to the risk premium linked to the Israel-Gaza escalation and Israel’s preparations for a ground invasion. However, the market struggles to push oil prices higher, as Saudi Arabia could easily cap them by increasing supply. The oil market remains in a fragile equilibrium, susceptible to knee-jerk reactions based on upcoming headlines.
Upward Possibilities
- The first support level for bulls is near $88.
- Beyond that, this year’s high at $94 is the next target.
- In the event of a substantial price increase, watch for $97.11, last seen in August 2022.
Downside Risks
- Traders brace for the region’s entry point near $78, where strong support for buying is expected.
- Further drops could lead to a significant decline, potentially pushing oil prices below $70.
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Disclaimer: Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
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