Oil jumps with China urging Iran to control Houthi rebels

• WTI Oil breaks out of its downtrend since October. 
• China diplomats have urged Iran to keep control of Houthi rebels. 
• The US Dollar Index broke out of tight range and holds good cards to jump higher. 

Oil prices are paring back earlier gains after Oil prices surged near 6% since its opening price on Monday for this week. The moves came after more and more shipping companies called for the longer haul around Africa instead of venturing the Suez passage via the Red Sea. Meanwhile China has opened up a fresh can of diplomats who have urged several key Iran personal and key military people to keep a lid on the Houthi rebels and defuse the tension in the Red Sea. 

Meanwhile, the US Dollar Index (DXY) defied friend, foe and gravity with a substantial surge in the DXY on Thursday. The move came on the back of a double-score with positive US Gross Domestic Product and Durable Goods orders. Some headwinds are emerging though with the Personal Consumption Expenditure (PCE) on the docket this Friday, and markets looking for a further decline in US inflation. 

Crude Oil (WTI) trades at $76.70 per barrel, and Brent Oil trades at $81.45 per barrel at the time of writing. 

Oil news and market movers: China puts oil back on the map

China has urged Iran to control the Houthi rebels in order to put back a safe passage via the Suez Canal and the Red Sea in place. The move comes as no surprise with China having export issues, and now the longer haul around Africa adds to even more slowing export numbers from the Asian producer. 

Oil traders are gearing up for more upticks in Oil as well, signalling that clearly something has broken in US Oil production. Recent Oil stockpile numbers showed substantial drawdowns, which means the US might need to be heading to markets to restock.

Next week all eyes will be on tanker-tracking data to be released, which will provide an insight into whether OPEC+ is complying with Oil production cuts. 

This Friday the Oil markets will close off with the weekly Baker Hughes US Oil Rig Count at 18:00 GMT. Previous number was at 497, which was a second consecutive decline from the 501 peak at the start of 2024. 

Oil Technical Analysis: A sprint to $80 granted?

Oil prices could be seen surging higher from here after markets jumped on the element of China mingling in the Red Sea tension. Either way, the three-week-long-haul around Africa will see more demand coming in for fuel to say the least. Meanwhile next week, tanker info being released, could give a brief snapshot of how the supply side is looking, where any hints on complying or over complying to OPEC+ production cuts, might add to more upside into next week. 

On the upside, $74 is out of the way and should act as support as of now. Although quite far off, $80 comes into the picture should tensions build further. Once $80 is broken, $84 is next on the topside. 

As said in the paragraph above, $74 will now act as support for the nearterm on any sudden declines. The $67 level could still come into play as the next support to trade at, as it aligns with a triple bottom from June. Should that triple bottom break, a new low could be close at $64.35 – the low of May and March 2023 – as the last line of defence.

US WTI Crude Oil: Daily Chart