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Crude Oil, WTI, Brent, US Dollar, USD/CHF, EUR/CHF, S&P NZX 20, Gold – Talking Points

  • Crude oil is on the march higher as uncertainty grows in the Middle East
  • Haven assets have been buoyed by the precarious situation, notably the CHF
  • If the Israel – Hamas war evolves further, where will that leave WTI?

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Crude oil has held onto Friday’s gains as traders continue to watch the developments in the Middle East.

As reports roll in of various pockets of fighting, the market remains cautious and concerned about the potential disruption to the global oil supply. The military build-up in the region is adding to scrutiny of the potential squeeze on available supply.

US Treasury Secretary Janet Yellen made comments on Friday that the US cannot rule out further sanctions against Iran, adding to concerns around the availability of the energy product.

The WTI futures contract is near US$ 87.70 bbl while the Brent contract is around US$ 90.90 bbl at the time of going to print.

Perceived haven assets have had a mixed start to the week with gold easing slightly after a stellar rally on Friday, dipping under US$ 1,920 an ounce.

The Swiss Franc has mostly maintained the strength seen last week, trading near 0.9000 against the US Dollar and close to a 13-month peak against the Euro around 0.9480.

The US Dollar is softer so far in the Asian session with the Aussie and Kiwi Dollars recovering some of the heavy losses seen at the end of last week.

The results of the New Zealand election over the weekend are not clear-cut at this stage, but there has been a shift away from the incumbent administration toward the conservative side of politics.

In any case, a coalition of some sort will need to be hashed out over the coming weeks. The S&P NZX 20 index finished down around a third of a per cent.

APAC equities are all under pressure with Japan’s Nikkei 225 index down over 1.50%. Futures are indicating a steady start to European and US equity indices to start the day.

Looking ahead, sentiment data from manufacturers in Canada and the US will be watched closely as well as commentary from the BoE, ECB and Fed speakers.

The full economic calendar can be viewed here.

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How to Trade Oil

WTI CRUDE OIL TECHNICAL SNAPSHOT

The WTI futures contract raced up to test resistance at the breakpoints between 87.76 and 88.19 but has so far been unable to overcome them. They may continue to offer resistance.

Further up, resistance might be at the breakpoint and previous peak at 93.64 and 95.03 respectively.

Support may lie near the breakpoints in the 84.70 – 84.90 area before the prior lows at 82.31 and 81.50.

WTI CHART

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Chart created in TradingView

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— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel via @DanMcCarthyFX on Twitter



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