Crude Oil in narrow range with markets assessing Middle East, China outlook

• Crude Oil finds support and stabilizes off its weekly low of $69.15 on Thursday. 
• Overnight API weekly numbers came in with a surprise drawdown. 
• The US Dollar Index breaks above a key level on its way to 104.00.

Crude Oil finds a floor and stabilizes for now on Thursday after a four-day losing streak, which currently still accounts for a nearly 7% loss in the week. The floor that starts to form comes with traders doubting if Israel’s Prime Minister Benjamin Netanyahu will uphold his promise to the United States (US) not to attack Iranian oil installations. An additional support came on the back of the overnight stockpile weekly numbers from the American Petroleum Institute (API), which came in at a surprise drawdown of 1.58 million barrels in the week ending on October 11 compared to an expected build of 2.3 million barrels. 

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is gearing up for a volatile session ahead. Besides a bulk load of US data, the European Central Bank (ECB) is set to deliver a 25 basis point interest rate cut. With the core countries in the Eurozone struggling, it will be important to see how ECB President Christine Lagarde will want to try and avoid a Euro meltdown. 

At the time of writing, Crude Oil (WTI) trades at $70.00 and Brent Crude at $74.09

Oil news and market movers: Several drivers taking into account

• China has announced a support plan for its domestic housing market. The size of the investment will be 4 trillion Yuan (CNY), while earlier this week on Monday, a message of about 6 trillion Yuan was communicated. Asian markets did not react well to the lower number, according to Bloomberg.
• Pressure keeps building on Israel’s Prime Minister Benjamin Netanyahu to ignore the US‘s request not to target Iranian oil installations. Unease is growing now even within his cabinet after an article in the Jerusalem Post on Tuesday from the opposition leader calling for an immediate attack on the Iranian installations, Reuters reports. 
• At 15:00 GMT, the Energy Information Administration (EIA) will release its weekly stockpile change numbers for the week ending on October 11. Expectations are for a small build of 2.3 million compared to the previous build of 5.81 million the prior week. 

Oil Technical Analysis: Bears and bulls fight over $70.00

Crude Oil battles to hold the $70.00 marker, but it will not be an easy task from here. Although lingering geopolitical tensions could push Crude Oil prices rapidly up, the whole thing could quickly crumble down if no events occur. While several other asset classes are moving with markets hedging for a potential presidential win for former US President Donald Trump in the November 5 presidential elections in the US, it becomes clear Crude Oil has no clue how to price in a Trump win. 

There is a challenging path to recovery for Crude Oil in the coming days. First, the pivotal level at $71.46, which was strong enough to catch the falling knife on Monday, must be regained again with a daily close above it. Once from there, the hefty technical level at $75.28, with the 100-day Simple Moving Average (SMA) and a few pivotal lines, is possibly the first big hurdle ahead. 

On the downside, that previously mentioned $71.46 pivotal level has now turned into resistance and no longer has any value as support. Instead, traders need to look much lower, at $67.11, a level that supported the price in May-June 2023. In case that level breaks, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the low of 2023.

US WTI Crude Oil: Daily Chart