- Crude oil moves sideways ahead of US economic data.
- Escalation in Middle-East conflict could drive the prices higher for the oil.
- API Weekly Crude Oil Stock and EIA Crude Oil Stocks Change are set to release their data.
Western Texas Intermediate (WTI) hovers around $85.50 per barrel during the early European session on Tuesday. Crude oil receives upward support due to the fear of the Israel-Hamas war.
Investors are uneasy about the potential escalation of the situation, as it may result in disruptions across the Middle East, potentially disrupting supplies from one of the world's leading production regions. There are growing calls within Israel to reassess the potential scope of a ground invasion of Gaza, which had been anticipated in the near term.
However, diplomatic efforts are underway to ease tensions in the Israel-Hamas Gaza Strip. Additionally, US Crude stockpiles were expected to have risen last week, a preliminary Reuters poll showed on Monday ahead of the API Weekly Crude Oil Stock and EIA Crude Oil Stocks Change.
The revelation of China's intent to authorize just over 1 trillion yuan in additional sovereign debt issuance seems to have had a positive impact on market sentiment. Moreover, constructive discussions between the US and China in their initial economic working group meeting have further bolstered this positive outlook. As a result, the safe-haven US Dollar is facing downward pressure, causing oil prices to appreciate.
The US Dollar Index (DXY) struggles to halt the losing streak, hovering around 105.60. After peaking at 5.02%, the 10-year Treasury yield swiftly reversed course, dropping to 4.81% in the latest update. If US bond yields further decrease, it tends to weaken the US Dollar, making commodities priced in dollars, like crude oil, more attractive.
Market participants gear up for a week filled with economic data. Tuesday will involve a careful examination of the US S&P Global PMI, followed by close attention to Q3 Gross Domestic Product (GDP) figures on Thursday. The week will wrap up with a spotlight on Core Personal Consumption Expenditures (PCE) on Friday.
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