Crude Oil Advances
Crude oil prices are rising as they attempt to break above the pivotal level of $71.46 during the US trading session. This follows positive US Purchasing Managers’ Index (PMI) data, which was stronger than the figures reported in the United Kingdom and Europe. Meanwhile, heightened geopolitical tensions over the weekend have provided further support for crude prices.
European PMI Data Declines
Earlier on Monday, European preliminary PMI data for September showed a significant drop in both Manufacturing and Services activity. This decline raises concerns about future oil demand in the region. In contrast, US PMI data remained resilient, with the Services sector performing above expectations.
Strengthening US Dollar
The US Dollar Index (DXY), which measures the dollar against six other currencies, saw gains on Monday. European investors shifted towards the safe-haven Greenback, fleeing from the Euro as nearly all European PMI indicators showed contraction.
As of now, WTI Crude is trading at $71.59, while Brent Crude is at $74.41.
Market Movers and Oil News
The positive US PMI data serves as a catalyst for rising crude prices, which increased by 0.50% during the US trading session after a slow start in European and Asian markets.
Tensions in the Middle East also impact oil prices. Israeli army spokesperson Avichay Adraee announced further military actions following heavy clashes with Hezbollah, which included missile strikes into northern Israel. This situation marks one of the most intense periods of conflict in nearly a year, according to CNN.
Additionally, Bloomberg reports that the amount of crude oil stored on stationary tankers worldwide dropped to 56.31 million barrels as of September 20, a 12% decrease.
Technical Analysis: Key Levels to Watch
Despite the rise in crude prices, negative economic data from Europe poses challenges for further upward movement. If the upcoming US data is softer than expected, concerns about declining global demand could arise, potentially offsetting the risk premium linked to geopolitical tensions.
Key Resistance Levels
The first resistance level to monitor is $71.46, the low from February 5. A sustained break above this level could lead to a possible return to $75.27, the high from January 12, but this would require a significant shift in current market dynamics.
Key Support Levels
On the downside, initial support is at $67.11, which formed a triple bottom in the summer of 2023. Should this level fail, the next support target would be $64.38, the lows from March and May 2023. If this level is also breached, the focus could shift to $61.65, with $60.00 representing a key psychological level just below it.
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