• Crude oil gained support for its 2024 rally on Tuesday.
• Markets ignore current events in the Middle East as there is no risk to production in the region.
• The US dollar index is looking for direction, which was in a narrow range at the beginning of the week.

Oil prices begin to accelerate their decline on Tuesday, testing market confidence and support for further gains. Traders do not attach importance or risk significance to the two major headlines that appeared on Monday and today. On the one hand, the funeral of the Iranian president who crashed in a helicopter accident. The second is an international arrest warrant issued by the International Criminal Court for Israeli leader Benjamin Netanyahu and the country’s defense minister on war crimes charges.

Meanwhile, the U.S. Dollar Index (DXY), which tracks the U.S. dollar’s performance against a basket of six major currencies, is looking for direction, with markets switching between risk-on and risk-off ahead of Nvidia’s Wednesday results. With another vast group of Federal Reserve (Fed) speakers scheduled for Tuesday, it may seem as if every Fed member is on repeat. So there are probably no up-to-date insights that could pinpoint the exact timing of the Fed’s initial rate cut.

At the time of writing, crude oil (WTI) was trading at $77.90 and Brent crude was trading at $82.29.

Oil News and Market Movers: Nothing is really moving

• Several countries issued warnings and asked to be on high alert due to the possibility of retaliatory action following the helicopter crash that killed the Iranian president.
• According to Reuters, US President Joe Biden sharply criticized the International Criminal Court, trying to side with its ally, Israel.
• Bloomberg News reports that President Vladimir Putin said that in early 2024, oil production in Russia was down 1.8% compared to the same period last year.
• On Tuesday at 20:30 GMT, the American Petroleum Institute (API) will release data on weekly changes in US crude oil inventories for the week ending May 17. The previous figure represented a decline of 3.104 million barrels.

Oil Technical Analysis: Any problems can be solved with an OPEC surplus

Oil prices are again testing the rising trend line from the December low for almost a third straight week. While there are plenty of headlines coming out of the Middle East, traders do not classify any of the events or headlines as a risk that could cause disruptions to the region’s oil supplies or global trade. This makes crude oil an outlier market where oil traders miss out on the opportunity for rising precious metals and gas futures prices.

On the other hand, the line in the sand remains at the 200-day Simple Moving Average (SMA), which currently stands at $79.62. Once above this level, a double layer appears with a 100-day SMA at $78.58. If extended upwards above this zone, the road is open again for $87.12.

On the other hand, the key level at $75.28 is the last solid line in the sand that could support an end to this decline. If this level is unable to sustain, investors can expect an accelerated sell-off towards $72.00 and $70.00. This would wipe out all gains for 2024. Further down the road, oil prices could test $68, the December 13 low.

US WTI Crude Oil: Daily Chart

(This story was corrected at 11:23 GMT to say Nvidia’s earnings release will be on Wednesday)