Crude oil price analysis: Market uncertainties cap US government deal craze

Crude oil price edged higher on Monday amid optimism over the reopening of the US government and the subsequent surge in domestic oil demand. After the Senate vote, the market is hopeful of approval from the House of Representatives and the US President.However, the underlying uncertainties have curbed the commodity’s upside potential. USO crude oil price remains range-bound as investors eye market reports from OPEC, IEA, and EIA. US Government Deal Bolsters Crude Oil PriceBrent crude oil price recorded its second straight week of losses in the just-concluded week amid heightened concerns of a supply glut in coming months. However, it has started the new week on its front foot as the market anticipates the end of the US government shutdown. Similarly, the benchmark of US oil price was trading in the green at $60.15 as at the time of writing.On Sunday evening, the Senate voted to advance a bill that would see the reopening of the government. The 60-40 vote in favor of the deal included the support of eight moderate Democrats. This crucial step has supported crude oil price as the market anticipates the return of the paused government spending and improved domestic demand for energy and other goods and services. Besides, an improved risk appetite is set to lower the demand for safe havens for a shift in oil and other assets. However, while the probability of the 40-day shutdown ending by mid-November is significantly high, the procedure is far from over. After the Senate vote, it will require approval from the House of Representatives before being handed over to President Trump for signing. With the underlying uncertainties, crude oil price will likely remain volatile in the short term. At the same time, a weaker US dollar has made crude oil less expensive for buyers holding foreign currencies. Notably, the US government shutdown and subsequent data blackout has forced financal markets to fly blind for weeks. While news of an end in sight have favored Treasury yields, the US dollar remains under selling pressure. The dollar index, which tracks the value of the greenback against a basket of six major currencies, started the week on a soft note, extending the recent correction. It remains below the crucial zone of $100 amid the improved risk appetite.In addition to the updates on reopening the US government, investors are also eyeing market reports from OPEC, IEA, and EIA. Crude oil price has been under selling pressure amid concerns over a supply glut in the coming months. USO Crude oil Price Technical AnalysisUSO ETF chart | Source: TradingViewThe United States Oil Fund (USO) started the week on its front foot after two consecutive weeks of losses. However, it continues to trade below the medium-term 50-day EMA amid uncertainties over the ending of the US government shutdown. At the time of writing, it was hovering along the short-term 25-day EMA at $71.64. While the market is expected to be highly volatile in the ensuing sessions, an RSI of 49 points to range-bound trading. This is as investors remain cautious of the ongoing efforts to end the over one-month shutdown. More specifically, the range between $71.26 and $72.77 will be worth watching in the near term. With further rebounding, USO crude oil price may find resistance at $73.70. On the flip side, this thesis will be invalidated by a pullback past the support zone of $70.59.The post Crude oil price analysis: Market uncertainties cap US government deal craze appeared first on Invezz