Oil prices rose further on Thursday, as falling US stockpiles added to the geopolitical risk premium brought by Middle East tension. Brent crude was at $81.54 per barrel up by 0.05 percent, while WTI went for $78.50, having gained 0.8 percent as of 11.00 UTC. The commodity’s upside is also supported by the weakening of the dollar after the Fed announced on Wednesday that consideration for a September rate cut was on the table.
The Energy Information Administration (EIA) announced on Wednesday a US inventory draw that had seen stockpiles decline more than expected for the fifth straight week. According to the EIA, US crude oil inventories declined by 3.436 million barrels, exceeding the forecast figure of minus 1.6 million barrels. Meanwhile, Iran vowed a strong response against Israel following the killing of Hamas political leader Ismail Haniyeh in Tehran on Tuesday night. That has raised the prospect of a full-blown war in the oil-producing Middle East, providing tailwinds for oil prices.
On the WTI 4-hour chart, the current price is well above the Volume Weighted Moving Average price of $76.52. That signals firm control by the buyers, and also points to the likely establishment of that level as a retracement mark. Also, the Relative Strength Index (RSI) is at 62, emphasizing the stronger upward momentum.
The momentum on WTI price signals control by the buyers above $78.33. That will likely see the bulls encounter the first resistance at $77.00. However, sustained control by the buyers at that point will break the resistance and potentially result in further gains to test $79.20. Alternatively, a move below $78.33 will signal control by the sellers, with the first support likely to be at $77.80. However, extended control by the sellers will break that mark and invalidate the upside narrative. Also, it could lead to further declines to test $77.30.
This post was last modified on Aug 01, 2024, 12:58 BST 12:58