Oil Pulls Back as Tensions in Middle East Ease
Oil prices pulled back as tensions in the Middle East eased, with traders focusing on the US's attempt to put economic pressure on Iran rather than resorting to military action. The US has signaled that it prefers to use sanctions and a naval blockade to push Iran into negotiations.
The Strait of Hormuz may be effectively closed for several weeks, with only a limited number of vessels passing through with their transponders off. However, traders remain optimistic about the US's strategy, despite the risks involved.
From a technical perspective, WTI oil is struggling to settle below $81.50 - $82.00, which could lead to further declines if it breaks through this level. If that happens, it could move towards the 50 MA at $78.97 or even lower to $77.50 - $78.00.
On the other hand, for WTI oil to gain upside momentum, it needs to settle back above $82.00 and head towards the resistance level at $86.00 - $86.50.