An early-week jump in oil prices, triggered by a surprise Hamas attack on Israel over the weekend, failed to gain momentum. Jump was triggered by concerns that the Hamas-Israel conflict may spill over the broader Middle East region, which accounts for around a third of global oil supply. However, as no signs of escalation beyond Israel and Gaza Strip could be spotted, oil began to trim gains and has filled Monday's price gap today. Apart from lack of spillover from Israel-Hamas conflict, a massive, almost-13 million barrel build in US oil inventories, signaled by API yesterday added to short-term downward pressures on crude market. Oil traders will look for confirmation of the drop in the official weekly report that is set to be released today at 4:00 pm BST.
Taking a look at WTI (OIL.WTI) chart at D1 interval, we can see that the price pulled back below the 50-session moving average (green line) and declines accelerated afterwards. Bullish price gap from Monday was filled today and it looks like the sell-off has slowed afterwards. In fact, WTI is trading higher today with demand-side reacting positively to the test of the $83 support zone. This area is marked with previous price reactions as well as the 38.2% retracement of the upward move started in early-May 2023. If bulls manage to hold onto current gains and defend the $83 area, it may hint that recent uptrend is still in play and price may look towards recent highs. However, a failure to hold onto those gains and drop below the $83 zone would make the technical picture more bearish.
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Source: xStation5
