West Texas Intermediate (WTI) crude oil prices dipped slightly during Tuesday’s Asian session, retracing some of the robust gains made overnight to approach the $80.00 mark, a level not seen in nearly three weeks. Despite this pullback, the commodity managed to stay above the significant $79.50 threshold, marked by the convergence of the 50-day and 100-day Simple Moving Averages (SMA).
Supporting the upward momentum, the OPEC+ producer alliance indicated last week that their plans to increase oil production from the fourth quarter of this year could be adjusted depending on market conditions. This announcement coincided with renewed optimism fueled by the International Energy Agency’s monthly report, which highlighted strong global fuel demand. Additionally, expectations of a decrease in US inventories leading to a tighter market in the latter half of the year are expected to further bolster crude oil prices.
Furthermore, concerns over potential disruptions to global oil supplies from the Middle East, a crucial oil-producing region, are adding to the positive sentiment surrounding oil prices. Tensions escalated recently as the Israeli military warned of intensified cross-border exchanges with Hezbollah in Lebanon, potentially leading to broader regional conflicts. Simultaneously, Israel expressed concerns about its relationship with Iran-aligned Houthi rebels in Yemen, heightening geopolitical risks in the region.
In contrast, mixed macroeconomic data from China, the world’s largest importer of crude oil, on Monday tempered some bullish sentiment among traders. Moreover, the strengthening of the US Dollar, supported by the Federal Reserve’s hawkish stance, is also likely to cap gains in crude oil prices as it attracts fresh buying interest.
Given these dynamics, market participants are advised to exercise caution and await strong confirmation of buying momentum before positioning for further upward moves in crude oil prices.
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