Oil rockets higher after Hamas launches surprise weekend attack on Israel

• Oil (WTI) jumps back above $82 after its steep decline last week.
• The US Dollar jumps higher with safe-haven flows in the Greenback and Japanese Yen.
• Expect to possibly see further upticks in oil prices as tensions are set to rise with US military ships being dispatched to the region. 

Oil prices are in for a wild ride after the surprise raids and attacks on Israel from Hamas. The Wall Street Journal was quite quick to issue a report saying that the attacks were the hand of Iranian officials. Although no Western officials have backed these statements, it points to a high risk of spillover for a global escalation in the region. 

Meanwhile, the US Dollar is firmly in the green. This time there is no rate-driven move as US bond markets are closed for the US public holiday. The Greenback is seeing ample demand from investors looking for shelter from another war in the Middle East that might only escalate further with Israel already carrying out retaliatory airstrikes. 

Crude Oil (WTI) trades at $84.02 per barrel, and Brent Oil trades at $86.13 per barrel at the time of writing. 

Oil news and market movers

• Oil prices are jumping higher, together with Gold and Copper, on fears the biggest attack on Israel in decades could broaden the turmoil in the wider Middle East. The Middle East accounts for nearly one third of global Oil supply. 
• Israel has pointed the finger at Iran after reports from The Wall Street Journal. No Western officials have come out backing those arguments. 
• Oil refiners across China are confident that flows from the Islamic Republic will continue unabated. Chinese involvement in the conflict or region does not look to be on the table. Furthermore, China is able to shortcut any supply disruptions by buying more oil from partner Russia.
• In an overall market move, with US Treasury bond markets closed for the US holiday, firm upticks are seen in Gold, Copper, Crude Oil, and safe havens like the US Dollar, Japanese Yen and Chinese Renminbi. 

Oil Technical Analysis: Wild ride

Oil prices were dropping like a stone last week as demand faded quickly. Despite the recent turmoil, overall expectations are that the US will try not to trigger any supply hiccups in the region by getting involved too much. Expect a wild ride with headline-driven moves higher, though a retest at $94 looks highly unlikely with supply being undisrupted.  

On the upside, the double top from October and November of last year at $93.12 remains the level to beat. Although it got breached on Thursday, the level never got a daily close above it. Should $93.12 be taken out, look for $97.11, the high of August 2022.

On the downside, traders are bracing for the entry of that region near $78. That area should see ample support for buying. Any further drops below that area might see a firm nosedive move, which would sink oil prices below $70.

US Crude (Daily Chart)