USD Weakness Driving Crude Recovery

Crude Rallying on USD WeaknessCrude oil is starting the week in a healthier fashion with the crude futures extending the gains seen on Friday through early trading today.  The main driver behind the move is the continued weakness we’re seeing in the US Dollar. With the greenback under heavy selling pressure as traders move to price out further Fed tightening and instead price in Fed rate cuts next year, risk assets are performing well at the start of the week, bolstering sentiment in oil markets.Middle East ImpactCrude prices have been under heavy selling pressure over recent weeks and months. The fallout of the Israel-Hamas war saw prices reversing from initial highs as the risks of a broader Middle East war looked to be fading. Added to this, concerns over the demand outlook in the US and China have exacerbated selling pressure. Still, with the US Dollar undergoing a solid correction, there is room for crude prices to build a bigger recovery.OPEC+ In FocusMarket chatter around OPEC+ likely extending or deepening its current supply restrictions is also helping lift prices on Monday. ANZ Bank put out a note today saying they expect current supply tightness to abate over Q1 2024, putting fresh pressure on the group to adjust its output in order to prevent a deeper price slide.Technical ViewsCrudeThe sell off in crude has seen the market breaking below several key support levels recently. Price is currently holding at the 72.61 level and is now retesting the underside of the broken 77.64 level. If bulls can get back above here, focus will be on the 82.59 level above, a break of which should signal a near-term shift in momentum.