Crude Oil Analysis: Commodities and Rising Tensions

Key Events

• Approaching September’s Easing Monetary Policies
• Rising Tensions Beyond Ceasefire
• Middle East Supply Disruptions on the Horizon
• Global Demand Outlook Concerns

Analyzing Oil from a Global Perspective

• Western Perspective: In the US and EU, ongoing discussions about easing monetary policies, from the Fed to the ECB, are boosting optimism in the oil market. Eyes are on Friday’s inflation reports, released just before the monthly close, for further clarity on September’s policy decisions.
• Eastern Perspective: In the Middle East, escalating tensions between Iran, Hezbollah, and Israel are dashing hopes for a ceasefire, adding upward pressure on oil prices amid concerns over potential supply disruptions.
• Global Demand Outlook: Recent declines in economic data from the US and China have sparked concerns about the global demand for oil. However, these concerns are being overshadowed by the expected impact of upcoming monetary easing cycles.

Analyzing Oil from a Technical Perspective

Crude Oil Analysis: USOIL – 3 Day Time Frame – Log Scale

Source: Tradingview

Oil has rebounded from the mid-channel, now facing a potential resistance zone between $77.90 and $80. A break above the $80 level could realign the trend with the upper boundary of the consolidation channel, which connects the consecutive lower highs from 2023 and 2024, near the $82 zone.

On the downside, if oil respects the resistance and reverses, it may head back towards the 2024 lows, with the $60 zone as a potential target.

With multiple factors influencing the oil market—ranging from monetary policies to global demand outlooks, OPEC strategies, and geopolitical tensions—oil has been consolidating between 2023 and 2024, forming a pattern of lower highs and higher lows. A decisive breakout is anticipated to establish the next significant trend direction.

--- Written by Razan Hilal, CMT – On X: @Rh_waves