WTI crude oil (CL) edged higher to around $73.00 during early Asian trading on Thursday. Rising geopolitical tensions are creating market uncertainty and supporting crude oil prices as markets react to the potential escalation of conflict. Tensions escalated further after reports that former President Trump privately approved attack plans for Iran.
The Wall Street Journal reported Trump’s conditional approval of strikes, pending Iran’s response to its nuclear program. Iran rejected US demands, raising fears of direct US involvement in the Israel-Iran conflict. These tensions increase the risk to Middle Eastern energy infrastructure and add upward pressure on oil prices.
Despite rising geopolitical tensions, US crude oil inventories recorded their most significant weekly draw in a year. The chart below shows that the EIA reported a drop of 11.473 million barrels, far exceeding expectations. However, the upside may be limited, as the International Energy Agency lowered global demand forecasts and raised supply estimates in its latest report.
WTI Oil Daily Chart – Price Surge
The daily chart for WTI crude oil shows that the price has surged above $66 in response to the conflict between Iran and Israel. The price has broken above the 200-day SMA and is exhibiting high volatility following the breakout. This volatility suggests that the price may soon break above the red dotted trend line. This breakout could potentially trigger a strong move toward the $80 to $84 area.
WTI Oil 4-Hour Chart – Descending Broadening Wedge
The 4-hour chart for WTI crude oil indicates that the price has broken out of the descending broadening wedge pattern and reached the pattern’s target, located near the $75 area. The price is now consolidating below $75 and is showing signs of building further positive momentum.
A break above $75 could trigger a move toward $80, while a break above $80 may lead to a rally toward $84. The risk of supply disruptions in the Middle East has fueled this strong bullish momentum, supporting a continued positive outlook for WTI crude oil.
