Crude oil prices edged up on Monday, erasing some of the losses incurred during the past three trading sessions. WTI crude futures were up +0.76% to trade at $81.24 per barrel, while Brent traded at $85.50, after rising by 0.56%. The commodity’s upside is catalyzed by a weakening US dollar and a favourable demand outlook amid supply concerns.
Crude oil is attempting to put a stop to the first consecutive three-day losses since January 31-February 2 and the initial fundamentals on Monday are likely to provide support. The US dollar, at 104.34, is marginally down by 0.08% as of this writing, underpinning the dollar’s current weaker standpoint. A stronger US dollar suppressed demand for dollar-denominated crude oil last week, even though the other underlying oil market fundamentals favoured price gains.
The EIA reported a decline in US crude oil stockpiles for the second week in a row last week, signaling good demand outlook. However, talks of a possible ceasefire agreement between Israel and Hamas exerted downward pressure on the commodity heading into the weekend. However, nothing substantial has been reported out of the Qatar-mediated talks, but developments in the Russia-Ukraine war have introduced a new angle.
Ukraine began its attacks on Russian oil refineries and pipelines about two weeks ago, and it has significantly increased the frequency since then. The energy war escalated over the weekend, with Russia conducting its largest attack against Ukrainian power infrastructure in two years. Russia, the world’s third-largest crude oil producer is estimated to have lost the capacity to produce about 600,000 barrels per day. This has created supply concerns, which will provide support for price gains.
Technical analysis
WTI crude price pivots at 80.80 and the RSI indicator signals control by the buyers. If they manage to maintain the price above the pivot, they will likely meet resistance at 81.90, but a move past that mark could see the commodity test 82.35. However, a downside momentum will prevail if the price action moves below 80.80. That will result in the sellers pushing to break the support at 80.40, which could potentially see the price make an attempt at 80.00.
