Oil News: Will Russia-Ukraine Tensions Drive Crude Prices Past Key Resistance?

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Updated: Nov 23, 2024, 08:54 GMT+00:00

Key Points:

Crude oil surged 6.46% last week, driven by escalating Russia-Ukraine tensions and a rebound in Chinese demand.
Traders eye $71.53 resistance after last week’s gains. A breakout could push crude prices toward the key $74.42 level.
Russia-Ukraine tensions stoke fears of oil supply disruptions, elevating geopolitical risks for the energy market.
China’s policies to boost energy imports signal rising crude demand, offsetting bearish global economic concerns.
OPEC+ supply signals and geopolitical developments could shape next week’s crude price outlook amid key resistance tests.

What Drove Crude Oil Prices Over 6% Higher Last Week?

Crude oil prices surged 6.46% last week, closing at $71.24, marking their strongest weekly gain in nearly two months. The rally was fueled by escalating geopolitical risks, early signs of a demand rebound from China, and key technical support levels holding firm. These factors outweighed bearish U.S. inventory data and ongoing concerns about slowing global economic growth.

Are Geopolitical Risks Repricing Crude?

Tensions from the Russia-Ukraine war played a pivotal role in supporting prices. Kyiv’s use of U.S.-supplied long-range missiles marked an escalation, while Moscow responded with ballistic missile strikes and warned of potential nuclear retaliation. These developments heightened fears of disruptions to Russian energy exports, the world’s second-largest crude supplier.

The market is also pricing in the risk of sanctions or accidental damage to infrastructure, especially with Ukraine’s earlier drone strikes on Russian oil refineries. Beyond Europe, Iran’s advancing nuclear program continues to stoke concerns over tighter global supply if new sanctions emerge.

Will China’s Policy Shift Sustain the Rally?

China’s policies to support trade and boost energy imports sparked optimism for demand recovery. Analysts project crude imports will rise in November, driven by discounted barrels from Iraq and Saudi Arabia. This outlook follows Beijing’s efforts to stabilize its economy amid concerns about weaker refinery margins and slower industrial activity earlier this year.

While these demand signals are promising, global economic headwinds persist. Weak Eurozone manufacturing and services data last week highlighted risks to broader oil consumption. Despite this, China’s measures and geopolitical tailwinds kept crude firmly in bullish territory.

Do Technical Levels Signal More Upside?

Weekly Light Crude Oil Futures

Weekly technical analysis indicates crude’s 6.46% rally has positioned prices near key resistance. Prices decisively reclaimed the Fibonacci level at $69.11, with bullish momentum pushing toward $71.53—the 50% retracement level. Holding above $71.53 could open the path to $74.42, which traders are closely monitoring as a breakout threshold.

Despite last week’s strength, the broader weekly trend remains bearish until a move above $77.78 signals a confirmed trend reversal. For now, the market appears rangebound, with $69.11 providing firm support and $74.42 acting as the upper boundary.

Oil Prices Forecast: Bullish or Bearish?

Crude oil is positioned for a bullish outlook next week, driven by geopolitical risks and potential demand growth from China. A breakout above $71.53 could lead to a test of $74.42, particularly if OPEC+ signals stronger supply controls at its December 1 meeting. Escalating tensions in Eastern Europe or new supply disruptions could further amplify upside potential.

However, bearish factors like rising U.S. inventories and soft global demand remain in play. Should resistance at $71.53 hold, prices may consolidate back toward $69.11. Traders should stay alert to geopolitical headlines and watch for any surprises in U.S. inventory data or OPEC+ announcements.

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.