Investing.com - If Friday’s market was any indication, oil gains could be reversed almost as quickly as they are made on news of any thawing of the crisis in the Middle East. The question though is how many hours of relative calm could there be in this conflict before the next headline of an escalation sends traders over the edge again?
While Israel and Gaza themselves barely register in the global oil trade, the Strait of Hormuz straddling them is a key chokepoint for the movement of crude, where a fifth of all oil passes through its waters, seems to be their logic. That retreat in prices came after the first thaw in the two-week-old war. But perspective is important in any situation. The Hamas gesture was super lightweight in the grand scheme of things. By the organization’s own account, there are 200 Israeli hostages in its hold and 50 more held by other armed groups in the enclave. Twenty have already been killed by Israeli air strikes, it says. Those freed do not even account for 2% of the total taken.
Since crumbling from record highs of more than $5 a gallon in June 2022, gasoline at US pumps has not been able to go much beyond $3.50 due to more than adequate supply and a narrowing refining “crack” - or profit margin., crude for delivery in December did a final trade of $88.30 on Friday after officially settling the session at $88.08, down 29 cents, or 0.3%. WTI hit a session high of $89.85 earlier. For the week, the US crude benchmark rose 2%, adding to the prior week’s gain of around 6%.
Consolidation above $87.25 will favor a retest of $89.85, above which WTI could be poised to take on $95 and $96.50,Gold retained its shine across the safe haven world on Friday, revisiting $2,000 for the first time since August and eventually setting a three-month high, as contagion worries from the Middle East’s latest war and the Federal Reserve’s hesitancy to raise US interest rates anymore sent a horde of investors toward the yellow metal.
Trading below $1,974, however, will see gold consolidate towards $1,968 and a sustained break below $1,968 will cause an extended decline towards the $1,958-$1,954 range. Failure to hold above that range will open the way for a test of the major support zone of $1,945-$1,935.
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