WTI Oil pops above $74 after US, UK perform joint strikes on Houthi positions in Yemen.

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• WTI Oil pops above $74 after US, UK perform joint strikes on Houthi positions in Yemen.
• Tensions build up further in the region with further escalations from the Houthi side confirmed.
• The DXY US Dollar Index holds above 102, though moves nowhere despite hot inflation report and Fed members dampening hopes on March rate cuts.

Oil prices are jumping higher after overnight strikes from the United Kingdom and the United States against Houthi positions in Yemen. The strikes are the next step in the story around the Red Sea where vessels and freight ships have been attacked by Houthi rebels out of Yemen during December. Meanwhile all big freight shipping companies are taking the long route around Africa, the US and UK have built a task force to restore safe passage in the Red Sea, with these strikes intended to create a new safe passage.

Meanwhile, the DXY US Dollar Index keeps facing selling pressure, with US Dollar bulls unable to rely on a stronger inflation report, tight labour market conditions or Fed officials pushing back on March rate cuts to supply uplift. One question on the table now is what could actually move the US Dollar Index up, as there is little left. This Friday the Producer Price Index is on the docket.

Crude Oil (WTI) trades at $75.02 per barrel, and Brent Oil trades at $80.25 per barrel at the time of writing.

Oil prices are hurting short sellers that have built up quite a position in these past few weeks. Since the fall of 2023 Oil has been in steep decline with short sellers being quick to add more shorts to their positions. With the UK and US now performing attacks on Houthi rebels in Yemen, geopolitical tensions will start to rise further with Iran and other Middle Eastern countries could soon join the tensions, pushing up uncertainty on Oil supply worldwide.

On the upside, $74 is getting broken and opens a lot of room to the upside for Oil to move into. Although quite far off, $80 comes into the picture should tensions build up further. Once $80 is broken, $84 is next on the topside once Oil sees a few daily closes above the $80 level.

Below $74, the $67 level could still come into play as the next support to trade at, as it aligns with a triple bottom from June. Should that triple bottom break, a new low for 2023 could be close at $64.35 – the low of May and March – as the last line of defence. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices fall sharply.

US WTI Crude Oil: Daily Chart

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