With prices reaching 74.55 USD per barrel, Brent crude oil experienced a significant increase driven by escalating geopolitical tensions in the Middle East. The surge of over 2% in the previous session was fueled by fears of potential shortages as the conflict in the region intensifies, particularly with Iran’s increased involvement.
Iran, a key member of OPEC, holds significant influence over global oil supplies. The assertive stance taken by Iran in the Middle East conflict raises concerns about disruptions in energy exports, which could tighten the global oil market and lead to higher prices.
Mixed Market Sentiments
Despite the upward pressure from geopolitical factors, the overall sentiment in the oil market remains mixed. Weak demand from China, the world’s largest oil importer, is one of the factors dampening the potential for a sustained recovery in oil prices. China’s sluggish economic indicators have limited energy consumption, affecting the demand for oil.
Additionally, the American Petroleum Institute (API) reported a decrease of 1.5 million barrels in inventories, less than the anticipated drop of 2.1 million barrels. This suggests that demand may not be as strong as expected, despite the consecutive weekly decreases in inventories.
Moreover, the appreciation of the US dollar has not yet had a significant impact on crude oil prices but could potentially do so in the future. A stronger dollar makes oil more expensive for holders of other currencies, potentially reducing global demand and exerting downward pressure on prices.
Technical Analysis of Brent Crude Oil
On the H4 chart, Brent crude found support at 69.90 USD and formed an upward wave targeting the 75.50 USD level. A correction back to 72.66 USD is possible after reaching this point, with potential for a new bullish wave extending to 78.20 USD. The MACD indicator supports this scenario, indicating increasing bullish momentum.
On the H1 chart, Brent broke above the 72.66 USD level and reached a local target at 75.30 USD. A consolidation range is expected below this level, with a corrective move back to 72.66 USD possible. The Stochastic oscillator confirms this outlook, suggesting a short-term correction before further gains.
Conclusion
The interplay of escalating geopolitical tensions, mixed economic signals, and market dynamics continues to influence Brent crude oil prices. While concerns over supply disruptions push prices upward, weak demand from China and inventory data from the US temper this rise. The strengthening US dollar could impact global oil demand in the near future, contributing to volatility in the oil market. Traders and investors should closely monitor these factors to make informed decisions.
Disclaimer: Any forecasts contained herein are based on the author’s opinion and should not be considered trading advice. RoboForex bears no responsibility for trading results based on the information provided.