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WTI Crude Oil Price Outlook: Stabilizes at $72.50 Amid Middle East Tensions and Airstrikes

Crude Oil Price Chart

West Texas Intermediate (WTI) Crude Oil price managed to stop its losing streak and found some stability in Asian trading on Monday after a recent sharp drop.

However, the dip was influenced by escalating tensions in the Middle East, where the US and UK conducted airstrikes on the Iran-backed Houthi militant group in Yemen.

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Despite ongoing efforts to negotiate a ceasefire in the Israel-Palestinian conflict, the US planned additional strikes on Iran-backed groups. At the time of writing, WTI crude oil is trading at around $72.50 per barrel.

Escalating Middle East Tensions: Impact on Investors and Crude Oil Prices

It is worth noting that the US and UK recently launched airstrikes on a group called the Houthi rebels in Yemen. This was in response to a drone attack that killed three US soldiers in Jordan. In return, the Houthi rebels stated they would increase their military activities, which could further escalate tension in the ongoing conflict.

Furthermore, the White House national security adviser, Jake Sullivan, mentioned ongoing airstrikes on militias supported by Iran and didn’t rule out possible strikes on Iran itself. Despite concerns about disrupting oil routes, investors remain cautious about escalating tensions in the Middle East.

Therefore, the news of heightened tensions in the Middle East, including US airstrikes and geopolitical uncertainties, has contributed to investor caution. This uncertainty may lead to fluctuations in crude oil prices.

US Job Data and Geopolitical Factors Weigh on Crude Oil Prices

Besides this, the previously released strong US job data has lowered the prospect of Federal Reserve interest rate cuts in March. However, a potential increase in rates could slow economic growth, leading to a decrease in oil demand and subsequently causing a decline in crude oil prices. Meanwhile, OPEC+ is confronted with a challenge in 2024 and 2025 as attempts to restrict global supply may be outpaced by non-OPEC producers like the US, resulting in oversupply.

Recently, the US Department of Justice imposed sanctions on an oil trafficking network supporting Iran’s Revolutionary Guard, seizing over 520,000 barrels. This action implies that ongoing geopolitical risks in the Middle East could still impact oil markets.

Therefore, the robust US job data reduces the likelihood of Fed rate cuts, potentially slowing economic growth and oil demand. OPEC+ supply challenges and US sanctions may keep Brent oil prices below $80, influenced by ongoing geopolitical risks in the Middle East.

WTI Crude Oil: Daily Technical Outlook

Crude Oil is at a pivotal moment, grappling with the $72.57 mark in the latest session. The commodity’s price action reveals an adherence to an upward trendline, currently providing support at the $72.17 level. This trendline is the demarcation for potential bullish sentiment, with the Relative Strength Index (RSI) indicating an oversold state at 37.49, bolstering the case for an upward price correction.

The immediate resistance awaits at $72.63, with further ceilings eyed at $75.92 and $76.88, each poised to challenge bullish advances. Conversely, supports are established at $71.14 and $70.09, beneath which the price may seek stabilization.

Notably, the 50-day Exponential Moving Average (EMA) at $75.92 stands above the current price, suggesting a recent bearish phase. However, the formation of a Doji candle at the support level hints at indecision, potentially prefacing a reversal.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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