Oil prices ease a touch on Tuesday but remain close to a six-week high after their firm uptick on Monday. Prices moved higher driven by increasing geopolitical tensions from Russia to Yemen, while supply issues in the US are also mounting. With parts of Texas reopening again after a tropical depression hit the Oil-producing region, one of the biggest refiners in the US, Pemex, said it is limiting its volumes again. Back in April, the firm faced a fire that damaged the installations, and now another plant has been forced to limit production due to a breach of air quality in the region.
Meanwhile, the US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is on the front foot after a sluggish start on Monday. The Greenback benefits from a risk-off market mood on Tuesday, with Nvidia in the US and Airbus in Europe facing substantial losses, dragging major indices down.
At the time of writing, Crude Oil (WTI) trades at $81.32 and Brent Crude at $85.05.
Oil prices are set to head higher before starting to ease once OPEC+ opens up the Oil tap again in full. The uptick will especially be felt in the US, where demand is expected to pick up as during summer a lot of citizens will be flying or driving for the holidays. Meanwhile, the hurricane season has started earlier than usual with already the first tropical depression having had impact on the Texas region.
On the upside, the red descending trend line near $81.00 has been broken and now needs to prove its resilience as support with both a daily and weekly close above it, not allowing any more false breaks. More room to move higher towards $87.12, the year-to-date high (April 5). Previously, a relatively small pivotal level would act as resistance near $84.00.
On the downside, the big belt of Simple Moving Averages (SMA) should work now as support and no longer allow to see moves below it. That means the 55-day SMA at $79.63, the 100-day SMA at $79.64, and the 200-day SMA at $78.90 should avoid any dips below $79.00. Should those levels not hold, another drop back to $75 could occur.