Crude Oil Prices Rise Amid Escalation in Russia-Ukraine Conflict
- Crude Oil prices are trading just below $68.00 on Monday, following an escalation in the conflict between Russia and Ukraine over the weekend.
- The G20 meeting, starting on Monday, includes discussions on a potential peace deal for Ukraine as a top priority.
- The US Dollar Index remains flat after hitting a fresh one-year high at 107.07.
The recent increase in Crude Oil prices can be attributed to the significant escalation in the conflict between Russia and Ukraine. Over the weekend, Russia launched a large air strike targeting Ukraine’s power grid, while the Biden administration authorized Kyiv to strike Russian territory with long-range missiles.
The ongoing G20 meeting in Rio de Janeiro, Brazil, will focus on finding solutions to the Ukraine crisis. With various parties, including Ukrainian President Vladimir Zelensky, calling for an end to the war in 2025, the possibility of a truce or peace deal could lead to a downturn in Crude Oil prices. Additionally, Russian Oil may re-enter the market once sanctions are lifted under a potential peace agreement.
Meanwhile, the US Dollar Index, after reaching a one-year high at 107.07, is now showing signs of retreat. Market focus is shifting back to the Federal Reserve (Fed) as uncertainties surrounding a December rate cut and the incoming Trump presidency come into play.
Currently, Crude Oil (WTI) is trading at $67.33, while Brent Crude is at $71.34.
Key Developments in the Oil Market
- The G20 meeting in Rio de Janeiro is expected to prioritize discussions on a peace deal for Ukraine amid escalating tensions between Russia and Ukraine.
- Data from Vortexa indicates a decrease in the amount of Crude Oil held on tankers that have been stationary for at least seven days, signaling potential shifts in global Oil supply.
- Nigerian business magnate Aliko Dangote is seeking to raise funds to enhance production at his $20 billion oil refinery near Lagos, as reported by the Financial Times.
Technical Analysis of Crude Oil Prices
Crude Oil prices are currently consolidating within a range, with support near $65.00-$66.00. A break below this support level could lead to further downside towards $64.38, a new low for 2024. The Relative Strength Index (RSI) on the daily chart suggests room for further downward movement.
On the upside, the 55-day Simple Moving Average (SMA) at $70.04 serves as the initial resistance level, followed by a significant technical barrier at $73.29, aligned with the 100-day SMA. The 200-day SMA at $76.59 could come into play if tensions escalate further.
Traders should watch for support around $67.12, a key level from previous years, and monitor the ascending trend line from October. A breach of these levels could push prices towards the 2024 low at $64.75 and ultimately $64.38, the 2023 low.
US WTI Crude Oil: Daily Chart
WTI Oil FAQs
- What is WTI Oil?
- What factors influence WTI Oil prices?
- How do weekly inventory reports impact WTI Oil prices?
- What is the role of OPEC in influencing WTI Oil prices?
WTI Oil, also known as West Texas Intermediate, is a type of Crude Oil traded on international markets. It is considered a high-quality, “light” and “sweet” Oil due to its low gravity and sulfur content, making it easily refined. WTI serves as a benchmark for the global Oil market.
Supply and demand dynamics, global economic growth, political instability, OPEC decisions, and the value of the US Dollar are key drivers of WTI Oil prices.
Weekly reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) on Oil inventories can affect WTI prices by reflecting changes in supply and demand.
OPEC, a group of major Oil-producing countries, plays a significant role in setting production quotas that can impact WTI Oil prices. Decisions by OPEC to adjust production levels can lead to price fluctuations.