Oil prices went lower in the early European trading session on Tuesday on the back of UN resolution on Gaza ceasefire. Brent crude oil traded at $85.95 per barrel, down by -0.09%, while WTI was at $81.85, having shed off 0.12% at the time of writing. The commodity rose by more than 1.5% on Monday on the back of a weaker US dollar, which could provide some support for intra-day gains. The initial demand-side outlook will be out on Tuesday when the American Petroleum Institute (API) releases its weekly crude oil inventory figures.
The United Nations Security Council voted on Monday to compel Israel and Hamas to a ceasefire. In an uncommon move, the United States went against Israel’s wish to veto the decision. While the war is still ongoing as of this writing, the ceasefire vote raises the chances of an eventual pause. This places downward pressure on oil prices, despite the existence of supporting fundamentals.
Elsewhere, Russian government ordered oil producers to cut their productivity to fit in the OPEC+ voluntary cuts program. This is in line with the country’s announcement that it would progressively cut production by 471,000 barrels per day. The cuts will provide support to oil prices in the near-term and middle-term as demand outlook remains stable.
Furthermore, the Russia-Ukraine war has lately focused on damaging each other’s energy infrastructure, and this has raised fears over supply disruptions. Also, a weaker US dollar improves the upside for crude oil prices, as it makes the commodity cheaper to buy in other currencies.
Technical analysis
WTI crude oil will need to keep its price above the 81.70 pivot. With the buyers in control, the upside will meet resistance at 82.30. However, a break past this mark could build the momentum needed to test 82.60. However, a move below 81.70 signals control by the sellers. That could break the support at 81.30 in extension and potentially test 80.80.