WTI finds support near $85, geopolitical tensions keep Oil demand intact
- The Oil price consolidates near $85.00 ahead of the US Inflation data for March.
- US inflation data will provide cues about when the Fed could start reducing interest rates.
- Iran’s direct involvement in the war in Gaza and more Ukraine attacks on Russian oil refineries could tighten the oil supply further.
West Texas Intermediate (WTI), futures on NYMEX, remain supported near $85.00 ahead of the United States Consumer Price Index (CPI) data, which will be published at 12:30 GMT. The inflation data for march will influence market expectations for the Federal Reserve (Fed) pivoting to rate cuts in the June meeting.
The inflation data is expected to remain stubborn due to higher oil prices, rentals, and insurance costs and portfolio management fees.
The Oil price corrects after printing a fresh five-month high at $87.50. However, escalating tensions in the Middle East region keep the Oil demand intact. Israel’s proposal of ceasefire doesn’t meet various Hamas demands, but the latter has commented that it would study further and revert to mediators. Hamas wants Israel to withdraw its forces and allow Palestinians to return home, who were displaced due to war in Gaza.
Fears of Iran’s direct intervention in the Israel-Palestine war deepen as the Israeli army has announced that they are ready to invade Rafah, the last resort for Palestinians who have been displaced.
Iran’s entry from the front to war at Gaza will significantly disrupt the oil supply chain. Iran is the third largest oil producer of the OPEC, and its direct involvement in war will tighten the Oil market significantly, which will have a positive impact on the Oil price.
In the eastern region of Europe, Ukraine’s drone attacks on Russia’s oil infrastructure have also kept fears of oil supply shocks unabated.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
