A new conflicts roils the oil market

Over the weekend, a new conflict broke out in the Middle East after Hamas, a designated terrorist organization, initiated an assault on Israel. This attack is already roiling the oil market, which saw oil prices rise more than 5% after the futures market opened. However, it is possible the impact has not been fully felt yet, considering the potential for further escalation amid Iran’s involvement in the preparations for the attack. Such developments could lead to broader conflict in the region responsible for producing one-third of global supply. That, in turn, could send the oil price much higher from the current levels (likely toward $100 and potentially even higher). As a result, we are closely monitoring the situation and will update our thoughts with the emergence of new events.

Illustration 1.01

Illustration 1.01 shows the daily chart of USOIL. The yellow arrow indicates an opening gap. If the gap fails to be filled, it will bolster a bullish case for oil in the short term.

Illustration 1.02

Illustration 1.02 displays the daily chart of USOIL and two simple moving averages. The yellow arrow indicates the initial return of the price in the upward-sloping channel (after the market opened). It will be bullish if the price re-enters the channel again and holds above the lower bound.

Illustration 1.03

The picture above portrays the daily chart of MACD. If it fails to break below the midpoint and starts flattening, it will be a bullish sign.

Technical analysis
Daily time frame = Slightly bearish
Weekly time frame = Neutral

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

Comment:

The price of oil began falling amid reports of no impact on the oil supply in the region (at least so far).