WTI crude oil futures experienced a decline after initially surpassing the 50-day moving average. This week, oil prices are set to close with a 5% gain, marking the largest weekly increase since late September last year. The rise is primarily driven by escalating geopolitical tensions due to the Russia-Ukraine conflict, which has heightened concerns over energy market stability.
Western nations' provision of advanced weaponry to Kyiv has increased the risk of disruptions to Russian oil supplies, prompting Moscow to intensify its military actions. Russian President Vladimir Putin confirmed the use of ballistic missiles, warning of potential global conflict. Additionally, Ukraine's drone attacks on Russian oil infrastructure, such as the June refinery strike, have kept market participants alert to further disruptions.
Despite geopolitical and demand-driven support, oil prices faced a brief decline due to weak economic data from the Eurozone. The region's dominant service sector has significantly contracted, exacerbating recession fears and raising concerns over global demand slowdown. Nonetheless, these factors have not hindered the upward momentum in oil prices this week.
Goldman Sachs forecasts Brent crude prices to remain between $70 and $85 per barrel. However, potential disruptions in Iranian oil production could push prices towards the upper limit of this range.
WTI crude oil futures are currently trading within a narrow range. While geopolitical risks and recovering demand support a bullish outlook, weak global economic data may cap gains. The 50-day moving average at $70.58 is a critical level; a drop below this could lead to a trend reversal targeting the $68.64 region. Conversely, maintaining above this level could pave the way for a rise towards the $72.15 target area. The expected trading range today is between $69.30 support and $72.30 resistance.
