Oil prices surge sharply today on concerns over escalation in geopolitical tensions that could eventually lead to military confrontation between US and Iran. It’s confirmed that a US drone was shot down by an Iranian surface-to-air missile. The US side claimed that the drone was shot in international airspace over the Strait of Hormuz. Iran’s Revolutionary Guards said the drone was flying over southern Iran.
WTI crude oil extends recent rebound and hits at high as 55.89 so far. Break of 54.86 resistance confirms short term bottoming at 50.64, after hitting 61.8% retracement of 42.05 to 66.49 at 51.38 . Further rise should now be seen back to 55 day EMA (now at 57.54). For now, we’d expect upside to be limited comfortably below 60 to complete the rebound. This level is close to 60.03 support turned resistance, 59.65 resistance and 61.8% retracement of 66.49 to 50.64.