1. Home
  2. /News
  3. /Oil Prices Drop to Mid-June Lows at $78.58, Gaza Ceasefire Looms

Oil Prices Drop to Mid-June Lows at $78.58, Gaza Ceasefire Looms

Arslan Butt•Sunday, July 21, 2024•2 min read
Oil prices experienced a notable decline, settling over $2 lower on Friday and hitting their lowest point since mid-June. This downturn is largely attributed to the anticipation of a potential ceasefire in Gaza, compounded by a strengthened U.S. dollar.
The impact of these geopolitical events on the crude oil market underscores the sensitivity of oil prices to international political dynamics.

Impact of Potential Ceasefire on Middle East Tensions

U.S. Secretary of State Antony Blinken’s recent remarks suggest that a ceasefire between Israel and Hamas is likely, which could reduce the geopolitical risk premium currently factored into oil prices.

Blinken expressed optimism about nearing an agreement that would not only facilitate a ceasefire but also aim at lasting peace and stability in the region.

This development is critical as it could lead to a reduction in attacks on commercial vessels in the Red Sea by Iran-backed Houthi rebels, further stabilizing oil supply channels.

Dollar Strength and Global Economic Indicators

The U.S. dollar index has risen following robust U.S. economic data, exerting additional downward pressure on oil prices.
A stronger dollar makes oil more expensive for holders of other currencies, potentially dampening demand. Simultaneously, as reported by official data, China’s slower economic growth rate at 4.7% in the second quarter raises concerns about one of the world’s largest oil consumers’ future demand levels.

Technical and Industry Factors Influencing Oil Prices

Further influencing the oil market, data from energy services firm Baker Hughes revealed a decrease in active oil rigs, with the count dropping to 477, the lowest since December 2021. This decrease in production capacity might offer some support to oil prices by tightening supply.
Additionally, incidents such as the recent collision of two large oil tankers near Singapore emphasize the vulnerabilities in major oil shipping lanes, which can also impact supply perceptions and pricing in the short term.
Overall, while geopolitical easing might suggest a downward trend for crude oil prices, technical factors like reduced drilling activity and global economic indicators will play significant roles in shaping the USOIL price forecast.
Investors and market analysts should continue to monitor these developments closely, as the interplay between geopolitical stability and economic data from major economies will be crucial in determining future oil price movements.

WTI Crude Oil Price Outlook

WTI Crude Oil is currently trading at $78.58 per barrel, experiencing a slight decrease of $0.20 or 0.25%. This movement is part of a broader volatility pattern evident in the 4-hour chart timeframe, where key price levels have been identified.

Key Price Levels:

  • The pivot point stands at $79.11, serving as a temporary floor for price movements.
  • Immediate resistance is observed at $81.46, with subsequent resistance levels at $82.94 and $84.00.
  • Immediate support is currently at $78.58, followed by further support at $77.56 and $76.43.

Technical Indicators:

  • The Relative Strength Index (RSI) is at 31.65, suggesting that the market could be nearing oversold conditions. This could potentially curb further declines in the short term.
  • The 50-Day Exponential Moving Average (EMA) is positioned at $81.46, which has been acting as a resistance level within the current market structure.

The downward trend channel observed provides support near the $79.10 level. A breach below this support could push USOIL prices toward the next support area around $77.56, extending down to $76.43 if the downward momentum continues.

Conclusion:

Looking ahead to next week, the oil market appears poised for a bearish trend if it sustains below the $79.10 level.
Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Avatar
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
Related Articles
img
Ripple (XRP) Drops to $0.5269 After US Jobs Report; Key Resistance at $0.5850
12 hours ago
img
Bitcoin Price Drops Below $54K Amid Jobs Report and Fed Rate Cut Speculation
12 hours ago
Sell Oil Signal, As Oil Prices Remain Bearish Despite OPEC, EIA
Oil prices broke below $69 yesterday and today's retrace higher seems week, so we decided to open a sell Oil signal just a while ago.     
2 days ago
Comments
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
Top
FX
Crypto
Commodities
Indices
Start Trading