Key Takeaways:
Oil prices slipped by over 1% following a surge triggered by geopolitical tensions in the Middle East.
Brent crude retreated to $79.76, while WTI dropped to $75.95, as traders locked in profits after recent gains.
The immediate threat of oil supply disruptions seems less likely, but uncertainty remains high.
Technical analysis of both Brent and WTI indicates potential short-term corrections before further price movements.
Oil Prices Surge Then Slip Amid Middle East Uncertainty
Oil prices saw a sharp rise earlier this week as tensions escalated between Israel and Iran, fueling fears of possible disruptions in oil supplies from the Middle East. Brent crude climbed above $80 per barrel, while West Texas Intermediate (WTI) surged past $77. However, after this rally, oil prices slipped by over 1.5% as traders engaged in profit-taking, with Brent falling to $79.76 and WTI to $75.95.
The market rally was driven by fears that Middle Eastern conflicts could hinder oil exports, but with some reassessment of the actual threat, prices have since cooled. Despite this, the underlying risks remain, and further price movements are likely as the geopolitical situation develops.
Oil Prices Slip as Traders Take Profits
The oil rally began in response to the conflict escalation between Israel and Iran-backed Hezbollah, raising concerns over potential supply disruptions. However, analysts have since noted that a direct strike on Iranian oil infrastructure seems less probable. With these reassessments, traders have begun to lock in profits, causing prices to pull back from recent highs.
Despite this retreat, oil prices remain volatile. As geopolitical tensions continue to loom large, analysts expect oil prices to remain supported. “We expect prices to remain supported amid ongoing uncertainty, but some corrections may occur in the short term,” said market strategist Yeap Jun Rong.
Technical Analysis: Brent and WTI Oil Movements
Brent Crude Oil Technical Analysis
Brent Oil Daily Chart: Brent oil has broken through its 50-day Simple Moving Average (SMA), signaling strong bullish momentum earlier in the week. However, the price remains under the key resistance at $80.30, with potential for a pullback to $78.50 before resuming its upward trajectory.
Key technical levels to watch:
Support: $78.50
Resistance: $80.30 and $84.42
The RSI on the daily chart indicates near-overbought conditions, meaning that Brent oil may correct slightly before moving higher. If Brent successfully breaks above the $80.30 resistance, the next target is $84.42, but short-term corrections are likely as traders continue to take profits.
Brent Oil 4-Hour Chart: The 4-hour chart shows Brent breaking out of an ascending channel pattern, but facing resistance at $80.30. If prices fail to breach this level, a short-term correction toward the $78.50 support is expected. The overall bullish outlook remains intact, though a short-term dip may occur due to overbought conditions on the RSI.
West Texas Intermediate (WTI) Technical Analysis
WTI Daily Chart: WTI has also followed a similar pattern, rising sharply on the back of geopolitical concerns but retreating as traders take profits. WTI remains above its 50-day SMA, but has failed to breach the $77.50 resistance level.
Key technical levels to watch:
Support: $74.50
Resistance: $77.50 and $80.00
The RSI on the daily chart indicates that WTI is approaching overbought conditions, similar to Brent. A pullback to $74.50 could occur before prices attempt to push toward the $77.50 resistance level again. If WTI manages to break above $77.50, the next target is the $80.00 psychological level.
WTI 4-Hour Chart: On the 4-hour chart, WTI is showing signs of weakening momentum as it approaches resistance at $77.50. A break above this level could see prices test the $80.00 level, but if the RSI remains overbought, a correction toward $74.50 is more likely in the short term. However, the overall outlook remains bullish as long as prices stay above the $74.50 support level.
Conclusion: Oil Prices Remain Volatile Amid Uncertainty
Oil prices have slipped from their recent highs due to profit-taking, but the underlying geopolitical risks remain. Both Brent and WTI are currently testing key technical levels, and further fluctuations are expected as traders navigate these uncertainties.
In the short term, a slight correction may occur as both Brent and WTI approach overbought levels. However, the overall outlook remains bullish, with potential upside targets at $84.42 for Brent and $80.00 for WTI if resistance levels are breached. As the situation in the Middle East continues to unfold, oil prices will remain sensitive to any new developments, and traders should be prepared for further volatility.
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