WTI Crude Oil testing below $85 after a bump higher on Gaza conflict, supply concerns mount over Gaza conflict
- WTI sees a topside jump to kick off the trading week.
- Middle East stability concerns are threatening oil prices, sending barrels higher.
- Israel ordered Chevron to freeze production at Tamar natural gas field, adding upside pressure to fossils.
West Texas Intermediary (WTI) Crude Oil caught a Monday bid on rising geopolitical tensions following a Hamas rocket attack on Israel in the Gaza Strip over the weekend. At least 700 people are dead and Israel has deployed approximately 100,000 additional troops to the region.
Crude oil markets are seeing rising concerns that an escalation of the Gaza conflict could destabilize Crude Oil supply, sending barrel costs higher for the new trading week and halting an extended decline that has seen oil prices close in the red five of the last six consecutive trading days and shedding nearly 15% peak-to-trough.
Gaza Strip escalation increases supply concerns
The Israeli government ordered US oil giant Chevron to temporarily halt production at its Tamar natural gas field just off the Israeli northern coast. The Tamar facility has frequently been closed down during periods of heightened unrest in the past.
Oil prices are pinning higher on concerns that the Gaza Strip escalation could spill over into additional geopolitical tensions in the Middle East and draw in nearby Iran and Saudi Arabia.
Analysts still expect crude oil supplies to undershoot demand for the last quarter of the year, which will see Crude Oil prices bolstered even further looking forward.
WTI technical outlook
WTI Crude Oil soared nearly 5.5% from the week's opening bids, just barely tipping over the $86.00 level before settling back into softer territory just south of $85.00, and is currently trading near $84.70.
Crude Oil reached a low of 80.63 in early trading before markets kicked off their supply-constraint rally, bringing the decline from September's tail-end peak of $93.98 over 14%.
Technical traders will note that WTI bids are currently getting hung up on the 50-day Simple Moving Average (SMA), and last week's decline through the rising trendline from June's bottom of $67.14 will see Crude Oil prices face additional downside pressure if bullish momentum can't be spooled up high enough.
WTI daily chart
WTI technical levels
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
