WTI Oil breaks out of its downtrend since October.

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• WTI Oil breaks out of its downtrend since October.
• China diplomats have urged Iran to keep control of Houthi rebels.
• The US Dollar Index broke out of tight range and holds good cards to jump highe

Oil prices are paring back earlier gains after Oil prices surged near 6% since its opening price on Monday for this week. The upmove came after more and more shipping companies called for the longer haul around Africa instead of venturing the Suez passage via the Red Sea. Though halfway through this Friday’s trading day, some negative news comes from OPEC delegates confirming no plans are on the table for output changes.

Meanwhile, the US Dollar Index (DXY) defied friend, foe and gravity with a substantial surge in the DXY on Thursday. The move came on the back of a double-score with positive US Gross Domestic Product and Durable Goods orders. Some headwinds are emerging though with the Personal Consumption Expenditure (PCE) on the docket this Friday, and markets looking for a further decline in US inflation.

Crude Oil (WTI) trades at $76.57 per barrel, and Brent Oil trades at $81.32 per barrel at the time of writing.

Oil prices could be seen surging higher from here after markets jumped on the element of China mingling in the Red Sea tension. Either way, the three-week-long-haul around Africa will see more demand coming in for fuel to say the least. Despite these elements supporting higher oil prices, OPEC itself said it will not look at further production measures in its upcoming meeting on February 1st, which delivers a blow to any further upticks.

On the upside, $74 is out of the way and should act as support as of now. Although quite far off, $80 comes into the picture should tensions build further. Once $80 is broken, $84 is next on the topside.

As said in the paragraph above, $74 will now act as support for the nearterm on any sudden declines. 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 could be close at $64.35 – the low of May and March 2023 – as the last line of defence.

US WTI Crude Oil: Daily Chart

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