Crude Oil seeks support and consolidation ahead of Biden-Netanyahu talks

• Crude oil is trying to find support after a firm correction on Tuesday.
• Markets look to developments in the Middle East, with President Biden set to speak with Israeli Prime Minister Netanyahu.
• The US dollar index prints a new September high and erases a weekly loss.

Oil finds support and stabilizes on Wednesday after a correction of more than 4% the previous day, when Israel refrained from strongly responding to recent attacks from Iran. Israel was stopped by United States (US) President Joe Biden, who asked not to attack Iranian oil fields and vital infrastructure. With a call between US President Biden and Israeli Prime Minister Benjamin Netanyahu later Wednesday, the risk of a full-scale strike is still a present danger that could be assessed very quickly.

The US Dollar Index (DXY), which tracks the greenback’s performance against six other currencies, is recovering from its previous weak performance from earlier this week. On Wednesday, markets await the release of the Federal Open Market Committee’s (FOMC) minutes from its September meeting, as traders will be able to get more information on the main drivers of the 50 basis point rate cut and what it could mean. in the future.

At the time of writing, crude oil (WTI) is trading at $73.22 and Brent at $77.08.

Oil and markets news: US stocks build despite hurricanes

• The American Petroleum Institute (API) reported a build of 10.9 million barrels in the week ended Oct. 4, compared with a lower 1.95 million barrels expected and following a 1.5 million barrel draw the week precedence.
• At 14:30 GMT, the Energy Information Administration (EIA) will publish the change in crude oil inventories for the week ending October 4. Expectations are for a small build of 2.0 million barrels, compared with a build of 3.889 million barrels the previous week.
• Angola’s oil exports are set to rise as the company steps up efforts to increase production from existing developments, Equinor reports. The company exports around 175,000 barrels per day, Bloomberg reports.
• Pemex said it had shut down oil rigs and crude export terminals in the Gulf of Mexico due to Hurricane Milton. The storm is approaching Florida’s west coast on Wednesday, where flooding and strong winds are expected to cause widespread damage and put lives at risk, Bloomberg reports.

Oil Technical Analysis: Bulls are sidelined for now

The price of crude oil was purified by opportunistic traders who piled into the price action with bets on a further escalation in the Middle East. Several stop losses from traders have been filled and some consolidation could be seen in the coming days. Expect some relaxation and sideways movement with support tested around $72.60.

Monday’s false break should be ignored as the move was fully associated on Tuesday. It means that the current pivot levels to the upside are still valid: the red downtrend line in the chart below and the 100-day simple moving average (SMA) at $75.67 above it makes this region very difficult to overcome. Once it holds above, the 200-day SMA at $77.16 should reject any further upside, as it did in early trading on Tuesday.

On the downside, old resistors have turned into supports. The first is the 55-day SMA at $72.62, which acts as a potential first line of defense in case of any pullback. A little further down, $71.46 (Feb. 5 low) 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