Oil prices continued their uptrend due to geopolitical concerns and economic data – will they continue higher?
Crude oil closed 3.17% higher on Wednesday, as it accelerated its uptrend on news about potential escalating Israel-Iran tensions and economic data including a larger-than-expected inventory draw. Today, crude oil prices are 1.5% lower. Currently, it looks like a correction of the uptrend. A breakout above the resistance level of $65-66 may be considered a positive signal.
For oil markets specifically, these developments are worth monitoring:
- U.S. personnel movements sparked market uncertainty as President Trump announced the relocation of American staff from the Middle East ahead of nuclear talks with Iran.
- Geopolitical tensions are driving oil market volatility as increased conflict with Iran raises concerns about potential supply disruptions.
- Nuclear talks scheduled for Sunday carry high stakes with U.S. Special Envoy Steve Witkoff set to meet Iranian Foreign Minister in Oman to discuss a potential deal.
- Crude oil inventories showed bullish fundamentals with Wednesday's data revealing a larger than expected draw of 3.6 million barrels. This inventory decline provided additional support to oil prices amid the geopolitical tensions.
Daily Chart: Breaking Above Previous Lows
Crude oil broke out from its previous medium-term lows yesterday, reaching highs of around $69. This means that the market has reversed its downtrend, moving back into its previous trading range.
Conclusion
Crude oil is trading lower today; however, it remains above the broken resistance level of $65-66. The next potential resistance is at $70, marked by the large gap down from April 3. Currently, it looks like a correction of the uptrend or just a consolidation.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil prices broke higher amid geopolitical tensions.
- The ongoing tariff-related volatility, combined with economic data, is adding to market uncertainty.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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