After the death of a Hamas leader in Iran brought up concerns about the potential for a broader Middle East conflict and its potential effects on oil prices, oil prices increased on Wednesday, creating a bullish, engulfing candlestick formation.
Why Did Oil Price Move Higher This Week?
Ismail Haniyeh, the leader of Hamas, was killed on Wednesday in Tehran, the capital of Iran. His passing occurred less than a day after an Israeli strike in Beirut claimed the life of Hezbollah's highest-ranking military commander, who resided in Lebanon.
These killings added to worries that the 10-month-old conflict in Gaza between Israel and Hamas is evolving into a bigger conflict in the Middle East that might disrupt the region's oil supply.
US Data On Crude Oil Price
The U.S., the largest oil consumer in the world, released a series of data, and the dollar depreciated, contributing to the price increases.
The U.S. Energy Information Administration (EIA) released data on Wednesday that showed that strong export demand caused the country's crude oil reserves to drop by 3.4 million barrels to 433 million barrels in the week that ended on July 26.
A weaker dollar may increase oil demand from shareholders retaining other currencies, and the US dollar index DXY continued its losses from the earlier session on Thursday. This came after the Federal Reserve had kept rates steady but hinted at a possible September reduction.
What Other Data Can Affect The Oil Prices?
According to Priyanka Sachdeva, an analyst at Phillip Nova, buyers are not confident about Chinese demand in the future, which will continue to help restrain oil prices' upside potential.
According to official data released by China on Wednesday, manufacturing activity fell to a five-month minimum in July. Manufacturers were struggling with a decline in new orders and low costs.
According to a private sector poll released on Thursday, the decline in new orders in July caused China's manufacturing output to contract for the first time in the past nine months.
In the UK, the recent rate cut by BoE could be a challenging factor for UKOUSD bulls as the stronger Pound might limit the gain until a clear sentiment comes from the ongoing geopolitical tension.
Oil Prices Forecast (UKOUSD) Technical Analysis
In the daily chart of UKOUSD, a corrective market outlook is seen where a bullish trend formation is likely to happen. In the most recent chart, a bullish Change of Character (CHoCH) is formed at the 84.62 level before rebounding to the immediate demand zone. As the current price is trading at the crucial demand zone, we may expect a buying pressure to come from a valid candlestick formation.
In the volume structure, the largest activity level is still above the current price, which needs to recover before forming a stable bullish trend.
In the bullish outlook of UKOUSD, a valid upward pressure with a daily close above the 100-day SMA could signal a potential long signal. The primary aim of the buying pressure is to test the 88.00 level before reaching the 94.00 area.
On the other hand, a failure to overcome the 20-day EMA with a bearish rejection could increase the possibility of moving below the 76.68 support level, aiming for the 72.48 support level.
