WTI Oil price is up by around $1.50 today, despite weak economic numbers from all over the world today, reaching a 2-month high. After the dip in the Chinese services PMI over the weekend, I thought that risk assets such as crude Oil would feel some pressure, but Oil up today, after consolidating above the 200 daily SMA last week.

WTI Oil Chart Daily – The 200 Is Acting As Support

Crude oil prices have experienced significant volatility this month, diving around 8 cents to $72 lows, and then bouncing more than $11 off the lows. Last week the volatility calmed as Oil was oscillating within a tight 1-cent range, consolidating above the 200 SMA. The 200-day Simple Moving Average (purple) has offered crucial support just above the $80 mark.

Despite last week’s unexpected rise in EIA inventories, oil prices have remained resilient. This stability is largely fueled by escalating geopolitical tensions in the Middle East, which continue to drive market uncertainty and sustain higher price levels. Possible, supply constraints and potential disruptions in the region are adding to the bullish sentiment, keeping oil prices buoyant despite bearish inventory data.

Middle East Tensions Contributing in the Oil Price Premium?

Today, WTI crude oil has surged roughly $1.50, reaching its highest level since April 30. The exact reasons behind this strength are hard to identify. U.S. inventory data has been disappointing, and global growth figures remain weak. There was a significant build-up of short positions at the beginning of June, and the early-June bounce likely pressured these shorts. However, it’s possible we are still experiencing a short squeeze.

There has been speculation about a potential Israel-Lebanon conflict, which could be a contributing factor. However, political events tend to have a fleeting impact unless they directly affect oil production. Despite the unclear drivers, WTI is theoretically in a favorable position, closing about $1 higher at 82.40, which was the mid-June high. This suggests there could be further upside potential as the market navigates these uncertainties.

WTI Crude Oil Live Chart