Oil prices are jumping higher with Reuters reporting Ukraine was able to strike a strategic Oil depot near St Petersburg. The domestic-made drone flew 1,250 km and was able to hit the projected target in a new offensive out of Ukraine to hit more key Oil storages that are partially used to provide fuel to the Russian war front. Russia from their side, did not confirm the strikes, though came out saying that several drones were shot from the sky with Russian defence systems. 

Meanwhile, the DXY US Dollar Index is caught in a difficult spot on the charts between two technical elements. The fact that the Greenback is unable to rally substantially comes with the rather small tweaking traders made to their positions, pushing back their rate cut bets from March to May. This makes the US Dollar able to strengthen a bit, but not substantially enough to move away from its current levels.

Crude Oil (WTI) trades at $74.44 per barrel, and Brent Oil trades at $79.22 per barrel at the time of writing. 

Oil News and Market Movers: Russia faces drone attacks

• Earlier this week headlines were coming out already that Russia was not complying with its OPEC production cut agreements. To make matters worse, Ukraine has started a new phase in its offence by attacking key Oil installations in Russia with drones. This could force Russia to pump up more Oil for its own use.
• The Energy Information Agency (EIA) released Crude Oil Stock changes for the US on Thursday, with a drawdown of 2.492 million barrels against a build of 1.338 million last week.
• The drawdown could be a side effect of the frost in Texas where refiners need to draw from the Cushing reserves with a key import pipeline closed for deliveries in the region and LNG terminals closed under the severe weather conditions.
• The week will get closed off with the Baker Hughes US Oil Rig Count near 18:00 GMT. Previously there was a count of 499.

Oil Technical Analysis: Russia faces fallout

Oil prices are set to close this week off in the green for both this Friday and its weekly performance. The number of geopolitical tensions are only broadening now that the Houthi rebels and the US are at a direct conflict. With these new drone attacks from Ukraine into Russia, the risk of retaliation from Russia will enlarge and might lead to the use of unconventional weapons on the battlefield. 

On the upside, $74 continues to act as a line in the sand after yet another failed break above it on Friday last week.  Although quite far off, $80 comes into the picture should tensions build further. Once $80 is broken, $84 is next on the topside once Oil sees a few daily closes above the $80 level. 

Below $74, the $67 level could still come into play as the next support to trade at, as it aligns with a triple bottom from June. Should that triple bottom break, a new low for 2023 could be close at $64.35 – the low of May and March – as the last line of defence. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices fall sharply. 

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