The oil market is currently influenced by a complex interplay of global factors, including potential monetary easing in the West and geopolitical tensions in the Middle East. Technically, oil is consolidating within a channel, with key resistance around $80 and potential support near $60.

Key Takeaways:

• Western monetary policy discussions are boosting oil market optimism.

• Middle East tensions are adding upward pressure on oil prices.

• Global demand concerns are overshadowed by expected monetary easing.

• Oil is trading in a consolidation pattern between lower highs and higher lows.

• A breakout from the current range could determine the next significant trend.

• Key technical levels to watch: resistance at $77.90-$80, support around $60.

Western Perspective:

In the US and EU, ongoing discussions about easing monetary policies, from the Fed to the ECB, are boosting optimism in the oil market. All eyes are on Friday's inflation reports, released just before the monthly close, for further clarity on September's policy decisions.

Eastern Perspective:

In the Middle East, escalating tensions between Iran, Hezbollah, and Israel are dashing hopes for a ceasefire, adding upward pressure on oil prices amid concerns over potential supply disruptions.

Global Demand Outlook:

Recent declines in economic data from the US and China have sparked concerns about global oil demand. However, these concerns are being overshadowed by the expected impact of upcoming monetary easing cycles.

Crude Oil Analysis: USOIL – 3 Day Time Frame – Log Scale

Oil has rebounded from the mid-channel and now faces a potential resistance zone between $77.90 and $80. A break above the $80 level could realign the trend with the upper boundary of the consolidation channel, which connects the consecutive lower highs from 2023 and 2024, near the $82 zone.

On the downside, if oil respects the resistance and reverses, it may head back toward the 2024 lows, with the $60 zone as a potential target.

Multiple factors are influencing the oil market, ranging from monetary policies to global demand outlooks, OPEC strategies, and geopolitical tensions. As a result, oil has been consolidating between 2023 and 2024, forming a pattern of lower highs and higher lows. A decisive breakout is anticipated to establish the next significant trend direction.

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