Middle East in Focus

Crude prices are seeing a quieter start to the week, following the rally we saw last week, as traders await fresh directional catalysts. News that Israel has ‘concluded’ its strike on Southern Gaza is drawing focus from oil traders. The news comes just days after Israel rejected Hamas’ ceasefire offer which fuelled the rally in crude prices last week. With the war ongoing, traders will continue to monitor incoming headlines.

Shipping Route Disruptions

Concerns over disruption to shipping routes in the Red Sea remain a key factor this week. The UKMTO reported on Monday it had received news of two ships being attacked by missiles south of Yemen. With Houthi rebels vowing to continue their assault until Israel ends the conflict, the situation remains precarious and oil prices remain vulnerable to upside shocks.

USD & US Crude Production

Away from the conflict in the Middle East, focus this week will also be on USD and US crude production levels. Tomorrow’s US CPI data will be key for determining near-term USD direction. If we see any downturn in USD on the back of a softer CPI reading this should help bolster all prices further. Traders will also be waiting on the latest EIA data midweek following last week’s report which showed US production moved back up to a record 13.3 million bpd.

Technical Views

Crude

Crude prices remain capped by the 77.64 level for now following the rally off the 72.61 level support and bull channel lows. With the channel holding, the focus is on a further push higher and a breakout towards 82.59 next. Only a break of 72.61 will negate this view, turning focus to support at 66.79. 

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