Oil prices surged overnight, with WTI crude breaking back above 70 as tensions in the Middle East escalated. Iran launched a retaliatory strike on Israel in response to the recent killing of Hezbollah leader Hassan Nasrallah and an Iranian commander in Lebanon. This has fueled concerns that Israeli retaliation could target Iran’s oil infrastructure, posing a significant risk to global oil supplies.
As Israel shifts its focus from Gaza to Lebanon and Iran, the conflict is entering a phase with greater implications for energy markets. The prospect of disruptions in one of the world’s most critical oil-producing regions has led to heightened market anxiety, with fears of further price increases if the conflict intensifies.
Technically, despite the rebound, WTI is seen as extending the near term consolidations pattern from 65.53 only. While further rise cannot be ruled out, outlook will stay bearish as long as 55 D EMA (now at 73.72) holds. Larger down trend is still expected to extend through 65.53 to 63.67 (2023 low) at a later stage. Tentatively, the medium term target is 100% projection of 95.50 to 67.79 from 87.84 at 60.13.
However, sustained break of 55 D EMA will argue that a medium bottom was already from, and stronger rebound would be seen back towards 80 psychological level.
