Technical Analysis

Oil prices continue to firm as Middle East tensions outweigh negative risk mood

WTI is up by 1.5% to $62.68 currently

ForexLive

Rising geopolitical risks is the major reason for the oil rally today after Saudi Arabia claims that two of its tankers were attacked over the weekend. The tankers affected were sailing towards the Persian Gulf and so far, no one has claimed responsibility over the attacks.

Oil prices have been bouncing around in the past week as markets continue to weigh geopolitical risks from the situation in Iran and a few untimely disruption to the North Sea field output, alongside the US-China trade situation where we’re seeing talks failing to reach an amiable conclusion.

For the time being, the former is winning out as oil prices are rising on the day. Of note, WTI is yet to firmly close below its 200-day MA (blue line) after testing it several times last week. That continues to highlight that buyers are still poised in this market environment.

I’d only start being more convinced of a further drop in oil prices if sellers manage a break of that key level. However, just be wary that we’ll soon have OPEC+ risks to deal with as the bloc looks set to meet to discuss on a possible oil output cut extension on 19 May.

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