Oil Volatility Returns

It’s been a volatile, yet ultimately directionless, week for oil markets. Crude futures have made solid moves both sides of the market but are currently only sitting just above the weekly open. The market has been keeping a tentative eye on developments in the Middle East with the constant risk of a dangerous escalation helping underpin price action against any downside factors.

Iran/Israel Risks

The key risk stemming from the Middle East conflict currently is the potential that Israel attacks Iranian oil sites. If seen, this would have heavy repercussions on global supply levels, as well as raising the risk of further supply disruption in the region if a wider conflict emerges. As such, all incoming headlines are being closely followed by crude traders with the market remaining highly vulnerable to fresh upside swings.

Hurricane Milton Impact

In terms of downside factors, the destruction caused by Hurricane Milton is currently being assessed in terms of how it might impact demand. With so many displaced from homes, so much damage caused and so many left without power, there is expected to be a severe drop in demand in the area near-term. As more data on this comes through we can expect to see crude prices reacting more directly.

USD On Watch

Finally, oil traders will be keeping an eye on USD. The recent rally has certainly helped curtail upside in crude prices. However, if we start to see USD fade back from current levels we could see oil prices starting to find their feet again next week.

Technical Views

Crude

The rally in crude has stalled for now into the 77.64 level with price since reversing lower. However, with 72.61 holding as support and momentum studies remaining bullish, focus is on a fresh push higher with the bear channel highs and 82.59 level above, the next target for bulls.