Brent oil consolidates near $70 after two-day rally

Brent oil is trading around $70 in Asia amid heightened US-Iran tensions and supply disruptions in Russia.
Prices rallied 1.11% and 1.84% in the previous two trading days, but key resistance at $73.38 is still intact.

Omkar Godbole FXStreet Contributor

Brent oil is currently trading just above $70 per barrel, representing little change on the day.

Prices rallied 1.11% on Monday as escalating tensions between US and Iran triggered fears of supply disruptions. On Friday, Washington announced that it will deploy more troops in the middle east, sending the black gold higher vey 1.84%.

The bid tone also strengthened on reports that Russia’s oil production dropped in May as shipments via the Druzhba pipeline to Europe were found to be contaminated in April.

The two-day rally, however, seems to have stalled near $70. Supply reductions by OPEC, escalating US-Iran tensions and drop in Russia’s oil output indicate the path of least resistance for Brent is to the higher side.

Even so, oil may remain under pressure if other riskier assets post losses on trade tensions.

Technically speaking, a break above $73.38 is needed to invalidate the negative bias put forward by the previous week’s bearish outside reversal candle.

Pivot levels

1. R3 70.4
2. R2 69.53
3. R1 69.07
PP 68.2
1. S1 67.74
2. S2 66.87
3. S3 66.41

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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