Bullish Bias For Crude This Week

Middle East Conflict Supporting OilOil prices have started the week tentatively bullish with crude futures trading in the green across early European trading on Monday. While prices have softened from the highs initially seen on news of the conflict between Israel and Hamas, the ongoing risk of escalation is keeping prices underpinned around current levels. Fears of a wider Middle East conflict developing out of the war have so far fallen flat, leading to fall back in crude prices. However, with Israel also engaging Hezbollah along its Northern border with Lebanon, risks of a wider conflict emerging cannot be ignored. In light of this, oil prices remain subject to bullish risks though, if the conflict continues as it (contained with Gaza), choppy trading is likely to continue with a ceasefire looking highly unlikely.Weak Data Weighs on USDAway from the Middle East, developments in the US are also helping support oil prices. A weaker-than-forecast set of US jobs data on Friday has further diluted near-term expectations of a further Fed rate hike. With USD coming off subsequently, commodities prices have been well buoyed, including crude. While this narrative remains in play, crude looks likely to continue higher medium-term. Looking ahead this week, traders will be monitoring incoming Fed speak as well as keeping an eye on Middle East news flow and the latest EIA inventories update.Technical ViewsCrudeFor crude traders, the key question now is whether price can get back above the 82.59 level. This is a key pivot for the market and, while below, the focus is on a further push lower for a test of the 77.64 level next, in line with falling momentum studies readings. Back above, however, and focus will shift back towards the YTD highs and the 93.47 level.