Global crude oil prices rose sharply on Wednesday on added geopolitical risk in the Middle East. Benchmark West Texas Intermediate (WTI) was up by 3.6 percent to trade at $77.44, while Brent Crude price increased by 2.4 percent to trade at $80.40 per barrel in the intraday session.
The death of two high-profile leaders of Hamas and Hezbollah, both attributed to Israel, has raised the stakes in the Middle East geopolitics. Israel announced that it had killed senior Hezbollah commander Fuad Shukr in Beirut, while Hamas political leader Ismail Haniyeh was assassinated in Tehran, Iran, on Tuesday, in what could precipitate an escalation of tension in the oil-producing region. The result is an added risk premium on oil prices, at a time when summer-driven demand was already on the rise.
Oil price signals control by the buyers, with the price currently above the 50-period Simple Moving Average (SMA). Furthermore, after a prolonged period below the 50-SMA, the 20-SMA line has changed its trajectory and is likely to cross above that mark if the current market fundamentals remain in play. An intersection of the two lines will cement the bullish view. In addition, the Relative Strength Index (RSI) indicator is at 66, signaling that the bulls are currently in control of the market. That also adds to the upside view.
The momentum on WTI crude oil price signals a likely control by the buyers above the $77.00 pivot mark. That could propel movement to as high as $77.49 for the first resistance. However, extended bullish control at that point will likely break above that mark, potentially building a stronger upward push to test $78.00. Conversely, a move below $77.00 will signal control by the sellers, and in that case, the first support could be established at $76.54. Extended control by the sellers will likely breach that mark, and at that point the upside narrative will be invalid. Also, the resulting momentum could strengthen the downside to test $76.10.
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