- The oil price strengthens as investors hope that US Biden’s blame on Palestine for bombing at Gaza hospital would deepen Middle East conflicts.
- Supply chain disruptions due to Israel-Palestine conflicts would dry the oil supply in an already tight oil market.
- WTI oil rises above the 50% Fibo retracement at $87.36.
West Texas Intermediate (WTI), futures on NYMEX, strengthened after the blast at the Gaza hospital in which around 500 civilians were killed provoked unrest among the general public. The oil price rose sharply to near $88.00 as conflicts between Israel and Palestine are seen worsening further.
Meanwhile, the visit of US President Joe Biden to Israel has pushed the risk-appetite theme on the backfoot. Biden blamed Palestine for hundreds of casualties after the explosion at Gaza hospital, not Israel. The visit of Biden to Jordan has been canceled as the summit has been called off due to civil unrest in Gaza.
Earlier, Iran warned Israel to stop attacks on Gaza otherwise it would not be a spectator in the war situation. The Middle East crisis would deepen if Iran intervenes in the conflicts as it will result in the disruption of the supply chain. This would dry the oil supply in an already tight oil market.
Going forward, investors will focus on the oil inventory data for the week ending October 13, which will be released by the Energy Information Administration (EIA). As per the estimates, oil stockpiles were drawn by 0.3 million barrels last week.
WTI oil rise above the 50% Fibonacci retracement plotted from (September 28 high around $94.00 to October 06 low at $80.36) at $87.36. The 50-period Exponential Moving Average (EMA) at $85.65 continues to provide support to the oil price bulls.
The Relative Strength Index (RSI) (14) shifts into the bullish range of 60.00-80.00, ensuring more upside ahead.
Fresh upside would appear if the oil price will break above 61.8% Fibo retracement around $89.00, which will expose the asset to the psychological resistance at $90.00, followed by October 2 high at $92.10.
In an alternate scenario, a breakdown below October 6 low at $80.63 would expose the asset to August 29 low at $79.21 and August 24 low at $77.53.
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