Crude Oil nosedives, shrugging off Israeli ground incursion into Lebanon

• Crude Oil falls over 2% as Israel breaches Lebanon's borders for a military operation. 
• Traders are sending Crude Oil lower with anticipations of a full-scale invasion being priced out. 
• The US Dollar Index jumps driven by Fed Chairman Powell's cautious outlook over interest rate cuts and geopolitics. 

Crude Oil slides lower on Tuesday, extending Monday's losses, even as Israel began its ground incursion into Lebanon.  Traders seemed to be expecting a much bigger or even full-blown ground offensive, which doesn't seem to be the case. Rather, the incursion seems to be based on several special operations and very specific targets being taken out around border posts and villages in Lebanon, limiting the actual impact on other countries in the Middle East. 

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is enjoying some inflow on the back of comments from Federal Reserve (Fed) Chairman Jerome Powell. The Fed Chairman pushed back against calls for another big rate cut in November, pointing out that the Fed remains data dependent. On the docket for this Tuesday, Manufacturing data from the Institute for Supply Management and the JOLTS Job openings for August will shed more light on the state of the US economy. 

At the time of writing, Crude Oil (WTI) trades at $67.48 and Brent Crude at $71.22.

Oil news and market movers: How a military excursion can be negative for Oil

• Israel Defense Forces are striking local villages close to the border that potentially could pose an immediate threat to Israeli communities in Northern Israel, Reuters reports. 
• The United Arab Emirates has expressed "deep concern" over Israel's ground operation in Lebanon, pointing out the possible repercussions of this dangerous situation for the region, Bloomberg reports. 
• Hezbollah is retaliating with missles being fired deep into Israel, Reuters reports. 
• From the demand side, bad news came from China with manufacturing activity shrinking in September as new orders both domestically and abroad cooled down, Reuters reports. 

Oil Technical Analysis: You can't buy the dip

Crude Oil prices is showcasing a textbook example here of "buy the rumour, sell the fact" wisdom when trading financial product assets. Tensions were building up towards this incursion from Israel into Lebanon over the past few days. With the actual event now being less severe and less impactful as first anticipated, the risk premium that got priced in last week is now fully being priced out. 

At current levels, $71.46 remains in focus after a brief false break last week. If a supportive catalyst remains present, a return to $75.27 (the January 12 high) could play out. Along the way towards that level, the 55-day Simple Moving Average (SMA) at $73.36 could ease the rally a bit. Once above $75.27, the first resistance to follow is $76.03, with the 100-day SMA in play. 

On the downside, $67.11, a triple bottom in the summer of 2023, could still hold as support once traders that want to buy the dip push price action back above this level. If that is not the case, further down the next level is $64.38, the low from March and May 2023. Even $61.65 could come into play should a ceasefire emerge or if Israel signals it is done with its special operation into Lebanon. 

US WTI Crude Oil: Daily Chart