WTI Oil popped higher in Asian trading hours on Monday.

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• WTI Oil popped higher in Asian trading hours on Monday.
• Tensions rise in Asia and the Middle East with several headlines emerging.
• The US Dollar Index steadies at pivotal level ahead of the US Fed rate decision and US Jobs report.

Oil prices were shooting higher with tensions rising in the Red Sea and Middle East. Houthi rebels attacked several vessels again in the Red Sea, followed by retaliation from the United States. Meanwhile Iran has issued a statement saying it is ready for war.

The US Dollar Index (DXY), which is negatively correlated to Oil, is continuing the trend from past Friday, where good US data at the end of last week pushed the US Dollar Index higher. Markets are bracing for two big events that could trigger a seismic shift in the DXY: the US Federal Reserve rate decision on Wednesday, and the US Jobs Report on Friday. Depending on the outcome of both events, the DXY could be trading substantially higher or lower by Friday.

Crude Oil (WTI) trades at $77.66 per barrel, and Brent Oil trades at $82.66 per barrel at the time of writing.

Oil prices are reacting to the headlines that are being issued on Monday with the Pentagon getting ready for more strikes in response to fatal casualties after a drone strike by Houthis on a US base in Jordan. Pressure is building for US President Biden to deliver a firm answer and response, in order to defuse tensions in the region. Despite all this, Oil supply is still flowing while demand is still at the lower end under current economic conditions.

To the upside, resistance at $74 is in the rear view mirror now and should act as support. 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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