Crude Oil Analysis
Afternoon: Crude Oil Surges Amid Middle East Tensions and Economic Shifts
Highlights:
- Monitor geopolitical developments in the Middle East closely.
- Keep an eye on key economic data releases for further indications of market trends.
- Consider buying on dips around $78, targeting $80, with a stop loss below $77.
Overview:
Crude oil prices soared towards $80 per barrel, driven by escalating conflict in the Middle East and strong US economic indicators. The Pentagon has increased its military presence in the region, with Defence Secretary Lloyd Austin deploying a carrier strike group and additional forces to counter potential Iranian threats against Israel. This geopolitical instability has heightened concerns about disruptions in global crude supply, further supporting oil prices.
Additionally, robust US economic data and discussions surrounding a possible US interest rate cut due to decreasing inflation have bolstered oil prices. The anticipation of lower borrowing costs is seen as a positive sign for economic activity and energy demand. However, OPEC has revised its 2024 global oil demand growth forecast downward, from 2.25 million barrels per day to 2.11 million barrels per day, citing weaker data and reduced demand from China. OPEC+ has also extended its production cuts through September, with a phased reduction set to begin in October.
Key Economic Data to Watch
The following key economic indicators are slated for release and could influence oil prices:
- Euro Zone: German ZEW Economic Sentiment, ZEW Economic Sentiment
- US Zone: Core PPI m/m, PPI m/m
Technical Analysis:
Crude oil prices are likely to find support at $78 and face resistance at $82. On the MCX, crude oil prices could get support at 6,500 and resistance at 6,800.
Summary
Crude oil prices are experiencing significant upward momentum due to geopolitical tensions and strong economic indicators. The deployment of additional US military forces in the Middle East, coupled with expectations of a US interest rate cut, has provided a boost to oil prices. However, OPEC's revised demand forecast and extended production cuts add complexity to the market outlook. Investors should stay vigilant and respond to emerging trends and data.
- OPEC revises 2024 global oil demand growth forecast downward
- US military presence increases in the Middle East amid potential Iranian threats
Action:
Buying on drop till pivot level 77.52 is advised targeting 79.47 (1st Resistance) which invalidates below 76.30 (support)
Support and Resistance Levels:
