On Wednesday (September 18th), in the morning session of the Asian market, international oil prices fluctuated narrowly, with US crude oil October futures currently trading around $70.98 per barrel. Crude oil prices rose by about $1 on Tuesday, reaching a nearly two-week high, due to intensified supply disruptions and geopolitical instability providing support for oil prices. However, the market's expectation of a 50 basis point interest rate cut by the Federal Reserve has slightly fallen, and the US dollar index has rebounded sharply, causing oil prices to give up some of their gains.

US crude oil futures for October rose $1.10, or 1.6%, to $71.41 on Tuesday, with a intraday high of $71.92 per barrel. Brent crude oil futures rose $0.95, or 1.3%, to close at $73.70 per barrel in November, with a intraday high of $74.28 per barrel. Both contracts have set their highest settlement prices so far this month.

After Hurricane Francine last week, over 12% of crude oil production in the US Gulf of Mexico was still shut down, boosting oil prices in four out of the past five trading days. This is the rebound that occurred after Brent crude oil prices hit their lowest point in nearly three years last Tuesday.

Charalampos Pissouros, senior investment analyst at brokerage XM, said, "Oil prices have been in a recovery pattern since last Wednesday, perhaps due to supply concerns after Hurricane Francine hit the Gulf of Mexico in the United States, as well as expectations of a decline in US crude oil inventories

According to data from the American Petroleum Institute (API), crude oil inventories increased by 1.96 million barrels in the week ending September 13th. Gasoline inventory increased by 2.34 million barrels, and distillate inventory increased by 2.3 million barrels.

The US Energy Information Administration (EIA) will release its official report at 22:30 Beijing time. Economists predict that last week, US crude oil inventories decreased by 500000 barrels, gasoline inventories increased by 200000 barrels, and distillate oil inventories increased by 600000 barrels.

Investors also hope that the highly anticipated interest rate cut by the Federal Reserve can revive demand in the largest oil consuming country. Federal funds rate futures show that the market believes there is a 63% chance of the Federal Reserve cutting interest rates by 50 basis points.

Independent energy and shipping analyst Matias Togni wrote on Tuesday that such a significant rate cut could weaken the US dollar and boost oil and other commodities priced in US dollars.

However, due to the US August retail sales rate released on Tuesday being stronger than market expectations, the expectation of the Federal Reserve cutting interest rates by 50 basis points this week has slightly fallen. The US dollar index rebounded 0.35% on Tuesday, closing around 101.02, causing oil prices to give up some of their gains.

Togni also said that there are signs that demand from major Asian countries is improving, and so far this year, the volatile economies of these countries have severely suppressed demand from the largest oil importing country. He added that the import volume of major Asian countries this month has approached the highest level of the year, exceeding 11 million barrels per day.

The signs of geopolitical tension provide support for oil prices.

According to a recent report cited by The Times of Israel and Sky News, the Israeli intelligence agency Mossad reportedly intercepted a batch of new pagers transported by Hezbollah in Lebanon a few months ago and installed explosives on them, launching a shocking attack on the Lebanese organization on Tuesday. It is reported that this highly explosive substance is pentaerythritol tetranitrate (PETN). Sources added that these devices were detonated by an external source, causing the battery temperature to overheat (triggering an explosion). It is reported that the pager explosion has caused 9 deaths and 2750 injuries, with the Iranian ambassador suffering minor injuries.

According to the Ukrainian news website RBC.UA, Ukrainian President Zelensky posted on social media platform X on the 16th local time, stating that over 90% of Ukraine's "victory plan" to defeat Russia has been formulated and will be presented to its Western allies next week.

From a technical perspective, oil prices have confirmed a retracement to the low point of 71.46 on August 21st, which was the strong support before August and the break in early September. If they cannot remain above this level, they need to be cautious of the risk of oil prices returning to a downward trend. Short term attention should be paid to support around the 5-day moving average of 70.21 and the 10 day moving average of 69.10. If oil prices can remain above 71.46, it is expected to further open up new upward space, with the midpoint target referring to the position near the 200 day moving average of 75.71.

US crude oil daily chart for October