Crude comes with uncertainty over what Israel will do next in retaliation against Lebanon

• Crude rose 2% on Monday after the Biden administration verbally refused to target Iranian oil fields.
• Markets are pricing in even more risk premiums, now that uncertainty dominates Israel’s next step in this escalation.
• The US dollar index is holding close to recent highs ahead of a busy Fed month.

Crude oil rose on Monday after Israel received a red light on its request to bomb Iranian oil fields. United States (US) President Joe Biden said on Friday it was under discussion, suggesting other targets should be sought. Without headlines that the Biden administration has given the green light, it looks like Israel will return to other actions, which adds even more uncertainty.

The US Dollar Index (DXY), which tracks the greenback’s performance against six other currencies, is trading broadly flat on Monday. All eyes will be on September’s US Consumer Price Index (CPI) later this week. In the run-up to those numbers, markets will hear from no fewer than four Fed officials this month.

At the time of writing, crude oil (WTI) is trading at $75.78 and Brent at $79.53.

Oil and markets news: Markets jitters over Israel uncertainty

• Oil production is suspended at the main gas and oil field in Kashagan due to the start of scheduled overhaul, Kazakhstan’s Energy Ministry confirmed to Interfax.
• A Goldman Sachs note from chief analyst Daan Struyven sees Brent reaching $90 when Iranian exports are disrupted, Bloomberg reports.
• Tensions in the Middle East remained high, with Israel sending troops into northern Gaza over the weekend while airstrikes and ground maneuvers took place in Lebanon at the same time, Reuters reported.
• Options markets are seeing a wave of buyers coming in with an appetite for call options, sending Brent implied volatility to its highest level in nearly a year, while money managers added more net long positions to their portfolios, a reported to the Chicago Futures Trading Commission. .

Technical Oil Analysis: $75.00

Crude oil prices are going through the roof again, with WTI breaking above $75.00 for the first time since late August. The fact that the Biden administration has not fully confirmed or denied Israel’s call to attack Iranian oil fields is creating more uncertainty for the markets. With the uncertainty comes the risk premium, which will be set this month.

The current level of the crude oil price, with the red downtrend line and the 100-day simple moving average (SMA) in the chart below at $75.74, fixing above it, makes this region very difficult to traversed. Once above, the 200-day SMA at $77.12 should reject any further upside.

On the downside, old resistors have turned into supports. The first is the 55-day SMA at $72.73, which acts as a potential first line of defense in case of any pullback. A little further down, $71.46 comes into play as second support before looking back at the high of $70.00 and $67.11 as final support for traders to buy the dip.

US WTI Crude Oil: Daily Chart