{x} | Trading.live

Abstract: WTI crude oil prices fell for the second day in a row and fell to around US$85.10/barrel during the Asian session on Tuesday. Despite this, after the last weekend Hamas attack, the continued tension between Palestine and Israel supported crude oil prices. The prospect of restrictions, embargoes, or sanctions on energy production in the region could further limit supply.

Fundamentals

With the increasing tension between Palestine and Israel, the price of crude oil is rising. Fears that tensions will spread to the wider Middle East are helping to push up oil prices.

We think there is room for a slight increase in oil prices in the coming month. After all, considering that the Iranian government openly supports Hamas's attack on Israel, Iran's crude oil supply will at least drop significantly. It seems that more Iranian crude oil will enter the global market later because the U.S. obviously does not strictly enforce the sanctions on the Iranian crude oil sector as before, but this situation may change now.

However, investors may consider that the supply situation will be even weaker in the future. Any action by OPEC may also affect the fluctuation of crude oil prices because it can take action to increase supply to prevent major confusion in the global crude oil supply level.

Previously, OPEC+'s production cuts pushed crude oil prices up sharply. According to data released by JODI, a joint crude oil database, Saudi Arabia's crude oil exports fell to a 28-month low in August as it continued to cut production to "stabilize" the global market. Since March this year, Saudi Arabia's crude oil exports have been steadily declining from the January high of more than 7.5 million barrels/day.

In addition, the data also shows that Saudi Arabia's crude oil production fell by 95,000 barrels per day in August to 8.92 million barrels per day, the lowest level in 27 months. In recent months, Saudi Arabia's production cuts and the decline in crude oil exports have kept the oil market tight. Reduced supply caused prices to soar to the highest level so far this year at the end of September.

The inventory data to be released by API and EIA will reveal more about supply and demand, and a large reduction in inventory will indicate an increase in consumption and may boost crude oil prices. On the other hand, the decrease in inventory may indicate that demand has slowed down.

Technical Analysis

WTI crude oil may enter an upward trend because the price of crude oil failed in the last two attempts to fall below US$82.50. The price has climbed to the double-bottom neckline resistance level of US$85.50, confirming that a reversal is about to occur.

In that case, the price of crude oil may rise to the same height as the chart, expanding its increase to US$88.50 or higher. 100 SMA is crossing the top of 200 SMA, and it is confirmed that the bullish pressure is rising and the price is already higher than the two SMAs, so these SMAs may be used as dynamic support for bargain hunting.

However, the stochastic indicator has shown that the bulls are overbought or exhausted; therefore, a move lower means that the bears will take over. Also, the Relative Strength Index looks poised to turn and move lower; therefore, as bearish momentum builds, the price could follow. However, support remains strong. It is recommended to buy the dips.

Trading Recommendations

Trading direction: Long

Entry price: 85.00

Target price: 88.20

Stop loss: 82.00

Deadline: 2023-10-30 23:55:00

Support: 84.27, 83.80, 82.45

Resistance: 86.97, 87.95, 89.14