Oil looks set to advance towards $86 on increased geopolitical tensions

• WTI Oil finds support at $80.63 and jumps higher.
• Oil traders see demand possibly picking up and supply risks increasing due to geopolitical woes. 
• The US Dollar Index trades above 104.00 though is a touch softer.

Oil prices are jumping higher on Monday after finding some technical support on the pivotal $80.63 level.  Prices could be set to rise further due to both supply and demand factors. On the supply side, Russia faces issues from both sanctions and drone attacks from Ukraine on Russian refineries and storage facilities. On the demand side, the projection that the US Federal Reserve will cut three times this year, coupled with a decline in borrowing costs in Europe as well, could spur the global economy and thus demand for Oil.

The US Dollar, meanwhile, is retreating a touch from its last week’s rally. Although the Fed clearly communicated they will be cutting three times this year, markets appear not to be buying into the argumentation. This week, the Fed’s preferred inflation gauge – The Personal Consumption Expenditure (PCE) Price Index – is set to be released on Friday, and another pickup in inflation could mean mayhem in markets.

Crude Oil (WTI) trades at $81.04 per barrel, and Brent Oil trades at $85.29 per barrel at the time of writing. 

Oil news and market movers: Russia getting crushed

• Markets are starting to gear up for possibly an extension of the 1 million barrel per day output cut from Saudi Arabia for the rest of the year to keep Oil afloat above $80.00.
• Bloomberg reports Iraq’s government and oil companies blamed each other for delays in resuming a key pipeline to Turkey, with discussion ongoing, that could keep the pipeline shut for longer.
• Goldman Sachs is bullish on commodities overall for this year as the US and Europe set to cut their interest rates.
• Indian refiners will no longer accept tankers owned by Russian state-run Sovcomflot PJSC because of the risk of sanctions.
•  

Oil Technical Analysis: Up to OPEC to keep it above $80

Oil prices have found back their mojo, moving further away from the sub $70 levels seen earlier this year. Besides Russia being in the crosshairs, another big element is that markets are getting ready for another extension in production cuts from Saudi Arabia. With markets getting accustomed to the recent balance, a pickup in demand and another Saudi extension could be a perfect mix to push crude up to $90.

Oil bulls will see $86 appearing as the next cap. Further up, $86.90 follows suit before targeting $89.64 and $93.98 as top levels. 

On the downside, both $80.00 and $80.60 should be acting as support now with the 200-day Simple Moving Average (SMA) as the level to catch any falling knives near $78.46. The 100-day and the 55-day SMA’s are near $75.54 and $76.79, respectively. Add the pivotal level near $75.27, and it looks like the downside is very limited and well-equipped to resist the selling pressure. 

US WTI Crude Oil: Daily Chart