Oil bottoms out after UK navy reports new attacks in Red Sea

• Oil price trades broadly unchanged, trying to snap a three-day losing streak. 
• The UK Marine reported that a vessel has been hit in the Red Sea by Houthi rebels.   
• The US Dollar Index hits rock bottom before bouncing a touch.  

Oil trades sideways on Wednesday, following three sessions of sharp selloffs, after several news outlets reported that a tanker got hit in the Red Sea by Houthi rebels. Delta Tankers has confirmed that one of its vessels, Sounion, has been attacked and is suffering minor damage. This element is very unwelcome at the moment Hamas is considering the ceasefire proposal in Gaza that both Israel and the US have put on the table. 

The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is in a similar pattern as Crude Oil as it tries to snap this week’s losing streak. However, the DXY had to hit rock bottom in order to do so, giving up all gains for 2024 and literally falling flat on the year before a small bounce could occur. The main event this Wednesday is the Federal Open Market Committee (FOMC) Minutes release ahead of Jackson Hole on Friday, together with the Nonfarm Payrolls Benchmark Revision that will possibly change nonfarm data over one year up until March of this year. 

At the time of writing, Crude Oil (WTI) trades at $73.07 and Brent Crude at $76.79.

Oil news and market movers: Red Sea attacks on the spotlight

• OPEC+ doesn’t seem to have not much room, if any, to boost production as that would put further pressure on Oil prices given the increased supply from the US and Brazil, according to BP Chief Economist Spencer Dale, Bloomberg reports.
• Uganda Minister of Energy Ruth Nankabirwa communicated that the country is moving forward with TotalEnergies and Cnooc to bring a $20 billion Crude development project to the country.
• Delta Tankers has reported that its tanker, Sounion, has been attacked at least three times. It is still assessing whether the ship is adrift or not and continues its course, Reuters reports. 
• The overnight Crude stockpile change from the American Petroleum Institute (API) posted a small build of just 347,000 barrels. Still, this was way above the 2.8 million drawdown expected by analysts.
• This Wednesday, the weekly Crude stockpile numbers from the Energy Information Administration (EIA) will be released. The previous number was a build of 1.357 million, with a drawdown of 2.8 million barrels expected. 

Oil Technical Analysis: Hand in hand

Oil tries to snap its losing streak and boot-start a recovery, although this looks rather bleak.. Still, the recent surge in attacks in the Red Sea could mean headaches ahead for the ceasefire deal that is on the table for Hamas to consider at the moment, and could quickly see a surge in violence again if the situation escalates further. 

On the upside, it becomes very difficult to be bullish with a lot of resistance levels nearby. The first element to look out for is the pivotal $75.27. Next up is the double level at $77.65, which aligns with both a descending trendline and the 200-day Simple Moving Average (SMA). In case bulls are able to break above it, the 100-day SMA at $78.45 could trigger another rejection as it did last week.  

On the downside, the low from August 5 at $71.17 is the best level for a bounce. It might not be bad to start considering levels below $70.00, particularly if ceasefire talks bear fruit and hedge funds start selling their speculative stake in Oil contracts. The $68.00 big figure level is the first level to watch followed by $67.11, which is the lowest point from the triple bottom seen back in June 2023. 

US WTI Crude Oil: Daily Chart