Oil Prices Rise on Indications of Reduced Supply and Geopolitical Tensions

WTI crude oil futures climbed above $78.5 per barrel on Monday, marking a slight increase from the recent low of $78.1 seen in the previous session. This rise was driven by indications of reduced supply. Saudi Aramco raised the official selling price of its Arab Light crude grade by 90 cents per barrel for June, surpassing market expectations of a 60-cent increase. This move was intended to signal confidence that OPEC+ members would adhere to previously indicated supply cuts. It aligns with the cartel's statement last week suggesting the possibility of extending voluntary output cuts of 2.2 million barrels per day beyond June if demand does not recover. However, formal discussions on this matter have not yet begun. Additionally, Israel's closure of the Kerem Shalom humanitarian crossing corridor into Gaza and the evacuation advisory issued for civilians in Rafah, following rocket attacks by Hamas over the weekend, have heightened concerns about the perceived progress toward a ceasefire and lowered concerns about escalating conflict, which had driven oil prices down last week.

In light of the developments mentioned above, in the beginning of the week, oil started with an uptrend. The initial resistance level to watch is the 200-day moving average, ranging between $80.15 and $80.20. Above this level, the resistance could be observed at $81. For upward movements, the third resistance level to monitor is between $82.00 and $82.10. If the current downward trend persists, the first support level would be around $78.30. Breaking below this level may lead to a visit to the midpoint of the rally since December 13, which is in the range of $77.40 to $77.60. If sustainability is not achieved at this point, $76.50 could be the next level to watch.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
82.10	81.00	80.20	78.30	77.40	76.50