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Oil prices are closing sharply higher, with WTI accelerating to the upside in the final hours of trading. The price settled at $84.50, up $2.10 or 2.55% on the day.
The Strait of Hormuz remains the key fundamental driver, as sharply reduced shipping traffic continues to fuel concerns about potential Middle East supply disruptions. At the same time, U.S.-Iran negotiations remain stalled, helping to keep a geopolitical risk premium embedded in crude prices.
There are, however, forces working to limit the upside. Gulf producers continue to find alternative routes to move barrels to market, easing some of the immediate supply concerns. Meanwhile, softer expectations for global demand and plans for increased OPEC+ production remain potential headwinds.
As a result, crude remains caught between two competing forces: Middle East supply risks are providing support, while demand concerns and the prospect of additional OPEC+ supply are working to cap the upside.
From a technical perspective, WTI spent much of the session trading above and below its 100-hour moving average at $82.47, before buyers took firmer control late in the day. The subsequent surge carried the price above last week’s swing high near $84.54, with today’s high extending to $84.88.
The rally also pushed WTI above the 50% midpoint of the decline from the July 23 high to the August 5 low, which comes in at $83.87. That break adds to the bullish technical tone. The midpoint level was also a close support level. Staying above keeps the buyers firmly in control. A move below could see the price that back then importance 100 hour moving average.
SUMMARY: Going forward, $83.87 now becomes an important support level. Staying above that midpoint keeps the buyers in control and leaves the door open for additional upside. A move back below it would take some of the momentum out of today’s late-session breakout.
This article was written by Greg Michalowski at investinglive.com.
