Crude Oil Market Analysis:

Oil prices edged higher in early Asian trade on Thursday, October 17th, paring some of the previous two sessions' steep losses. WTI crude is currently trading around $70.94 per barrel, supported by a surprise drop in US crude inventories reported by the American Petroleum Institute (API) and ongoing geopolitical tensions in the Middle East, which attracted dip-buying.  While uncertainty surrounding the Middle East conflict persists, concerns about potential supply disruptions due to an Israeli retaliatory attack on Iran have eased somewhat, leading to a reduction in the risk premium.

Brent crude futures settled at $74.77 a barrel, up $0.52 or 0.7%. US crude futures settled at $70.94 a barrel, up $0.44 or 0.6%.

Israeli airstrikes on Wednesday destroyed the municipal headquarters in the southern Lebanese city of Nabatieh, killing 16 people, including the mayor. This marked the largest attack on an official Lebanese building since Israel began its air campaign.

On Wednesday, the American Petroleum Institute (API) reported a crude oil inventory draw of 1.58 million barrels for the week ending October 12th, defying analysts' expectations of a build of around 1.8 million barrels. Earlier this week, both OPEC and the International Energy Agency (IEA) lowered their forecasts for global oil demand growth in 2024, citing China as the main factor behind the downward revision.

In addition to the EIA inventory data, market participants will be watching for the release of US retail sales, initial jobless claims, and industrial production figures for September.  Geopolitical developments will also remain in focus.

Crude Oil Technical Analysis:

Daily Chart:Oil prices continued their decline yesterday, breaking below the $72 support level and extending the bearish momentum.  Prices fell further during the European and US trading sessions, breaching the $70 mark and reaching a low of $69.7 before rebounding slightly to close around $70. The daily candlestick pattern is a bearish engulfing pattern, confirming the downward trend.

The daily chart indicates that any rebound before a decisive break above $72 should be viewed as a selling opportunity.  The main focus remains on participating in the prevailing downtrend.

4-Hour Chart:The 4-hour chart shows that oil prices are facing resistance near the opening price of yesterday's decline, around $71.8-$72. Any rebound towards this level should be seen as an opportunity to sell, with the downside target remaining a break below the recent lows.  The $73 level is a key resistance zone for the bears to overcome to confirm further weakness.

Overall:The short-term outlook for oil favors selling on rallies with selective buying on dips.

Key Resistance Levels: $72.0 - $72.5

Key Support Levels: $69.5 - $69.0

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