Crude Oil posts fresh monthly high as markets weigh up likelihood of fresh escalation in Middle East

• Crude Oil is set to lock in over 8% of gains for this week on supply concerns amid the escalating conflict in the Middle East. 
• The Biden administration and Israel discuss possible strikes on Iranian Oil fields. 
• The US Dollar Index consolidates gains ahead of Nonfarm Payrolls data. 

Crude Oil heads into its fourth straight day of gains for this week, accumulating more than 8% price rise since its opening on Monday. With tensions not easing in Lebanon, more risk is being priced in after headlines emerged that Israel was seeking green light from the Biden administration to target Oil installations in Iran. Concerns about such an attack, which could disrupt supply, set the tone to come over the weekend and into next week, with a ceasefire deal looking further away than ever. 

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is trading broadly flat this Friday after a steep four-day rally. The US Dollar Index has broken above 101.9,  the upper band of the September range in which it has been trading for over a month. The US Jobs report on Friday, which includes the key  Nonfarm Payrolls release as the main component, will decide where the DXY will close off this week. 

At the time of writing, Crude Oil (WTI) trades at $74.38 and Brent Crude at $78.48.

Oil news and market movers: No room for easing 

• Oil prices could rally further if there's any response by Israel to Iran's October 1 missile attack that targets Oil-related infrastructure. Further retaliation by Iran based on a blockade of the Strait of Hormuz could raise the price of crude to north of $100 a barrel, Bloomberg Intelligence reports. 
• A spillover effect is taking place in petrol prices as Israel ponders a hit on Iranian Oil fields, Financial Review reports. 
• US President Joe Biden said on Thursday that he was still discussing possible Israeli strikes on Iranian Oil facilities. The President refused to comment on whether he agrees with the path forward that Israel is asking, according to BBC. 

Oil Technical Analysis: Shooting through resistances

Crude Oil price action is keeping technical writers at work with one pivotal level after another being broken. On Thursday, the 55-day Simple Moving Average (SMA) at $72.77 was the last victim of the rally. Although $75.00 is still a stretch away, prices could reach that level if Israel gets the green light of the US to attack Oil installations. 

The new pivotal upside level is first $75.27. That level coincides with the red descending trendline and the 100-day SMA at $75.77 just hovering above it. That makes that region a very difficult one to break through. Once snapping above there, the 200-day SMA at $77.10 should refute any further upticks. 

On the downside, old resistances have turned into supports. First is the 55-day SMA at $72.77, which acts as a potential first line of defence in case of any retreat. A bit further down, $71.46 comes into play as second support before looking back to the $70.00 big figure and $67.11 as ultimate support for traders that want to buy the dip. 

US WTI Crude Oil: Daily Chart