WTI climbs on geopolitical tension amid supply disruptions concerns

WTI Crude Oil, the US benchmark, rises over 2% amid escalating geopolitical tensions in the Middle East.
Attacks on ships around the Red Sea by a militant group linked to Iran, impacting Oil shipping routes, contribute to the rally.
The recent weakening of the US Dollar after the Federal Reserve pivot, along with geopolitical risks, to underpin WTI’s price.

Christian Borjon Valencia FXStreet

The US Crude Oil benchmark, also known as West Texas Intermediate (WTI), has risen more than 2% on geopolitical risks as a militant group linked to Iran continues to attack ships around the Red Sea. This has triggered a rally in WTI, exchanging hands at $73.82 due to Oil supply disruption.

WTI surges as a militant group linked to Iran continues attacks on ships in the Red Sea

Crude Oil prices extended their rally to four straight days, bolstered by a weaker US Dollar (USD) after the US Federal Reserve (Fed) ended its tightening cycle, hinting that rate cuts lie ahead in 2024. Nevertheless, an attack on Norwegian-owned vessels and Oil shipping firms avoiding the Red Sea is already impacting Oil prices.

Sources cited by Reuters said, “The rise in geopolitical risk premium, which has come in the form of regular hostilities towards commercial vessels in the Red Sea by Iran-backed Houthi rebels, plays its indisputable part in Oil's resurrection.”

Around 15% of world shipping traffic passes via the Suez Canal, the shortest shipping route between Europe and Asia.

Meanwhile, an increase in supply cushioned WTI’s rise on Monday, but Russia and Saudi Arabia, extending Crude Oil production cuts to the first quarter of 2024, are underpinning Oil prices.

WTI’s outlook remains uncertain due to the recent developments, but due to the location of daily moving averages (DMAs) above WTi’s price, could open the door for further losses. Otherwise, further escalation in the Middle East area, could lift prices and dent inflation progress worldwide.

WTI Price Analysis: Technical outlook

The daily chart portrays WTI as neutral to downward biased, but today’s jump would pave the way for a new trading range within the $72.22-$76.00 area, ahead of testing the 200-day moving average (DMA) at $77.72. On the other hand, achieving a daily close below November’s 16 latest cycle low of $72.22 could open the door to a dip to the $70.00 mark, followed by December’s swing low of $67.74.

WTI US OIL

Overview
Today last price	73.72
Today Daily Change	1.71
Today Daily Change %	2.37
Today daily open	72.01

Trends
Daily SMA20	73.72
Daily SMA50	78.6
Daily SMA100	81.62
Daily SMA200	77.6

Levels
Previous Daily High	72.56
Previous Daily Low	70.66
Previous Weekly High	72.73
Previous Weekly Low	67.97
Previous Monthly High	83.34
Previous Monthly Low	72.39
Daily Fibonacci 38.2%	71.39
Daily Fibonacci 61.8%	71.83
Daily Pivot Point S1	70.92
Daily Pivot Point S2	69.84
Daily Pivot Point S3	69.02
Daily Pivot Point R1	72.83
Daily Pivot Point R2	73.65
Daily Pivot Point R3	74.73

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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