Middle East attacks trigger short-term buying of crude oil, but technical indicators remain under pressure
2025-09-10 20:19:05
WTI crude oil futures rose approximately 1% during European trading on Wednesday (September 10), but their gains stalled at technical resistance. Prices briefly broke through the 20-day moving average ($63.49), reaching a high of $63.44 before retreating below it—a move that underscores buyers' continued wait-and-see attitude. A firm close above this moving average would further strengthen the market's tone; traders are currently focusing on stronger resistance at $64.40 and the key $64.56 level.
If oil prices can sustainably break through these resistance levels, further upward movement is possible. Subsequent resistance levels are concentrated at $65.41, $66.03, and $66.18. $66.18 is considered a potential trigger point for an acceleration in the upward trend, with a breakout likely targeting $68.70. On the downside, $61.45 is considered initial support, with stronger support at $61.12.
Middle East and Ukraine conflicts drive short-term buying of crude oil
Crude oil prices were boosted early Wednesday morning by reports that Israel had attacked Hamas leadership in Qatar. The attack initially pushed benchmark crude prices up nearly 2%, but gains subsequently pared back gains. Furthermore, geopolitical risks escalated further when Poland intercepted a drone during a Russian attack on Ukraine—the first time a NATO country has directly intervened in such an operation. Despite the heightened tensions, traders noted that no direct supply disruptions had occurred.
Despite the attention generated by the above news, the rise in oil prices failed to gain enough momentum.
Analysts at Nordea Bank (SEB) warned that the "spectre of future oversupply" was still weighing on the market, noting that Brent crude prices had fallen $2 since last Tuesday, suggesting the geopolitical risk premium would be of limited duration unless supply faced an immediate threat.
U.S. tariff threats and Fed policy in focus
Beyond geopolitics, another political issue warrants attention: reports indicate that former US President Trump has urged the European Union to impose 100% tariffs on imports from two major countries, including India. These two countries are major buyers of Russian crude oil, and if their crude oil imports are blocked, it could have a ripple effect on global crude oil flows. However, aggressive sanctions could conflict with inflation concerns and complicate the Federal Reserve's interest rate decisions.
Traders still expect the Federal Reserve to cut interest rates at its September 16-17 meeting, a move that could stimulate economic activity and oil demand. However, until such time as the rate cut occurs, uncertainty over monetary policy will remain a major headwind for the market.
EIA inventory data and OPEC+ output capped oil price gains
Supply concerns remain a key factor affecting trader sentiment. Preliminary data released by the American Petroleum Institute (API) showed that U.S. crude oil, gasoline and distillate inventories all rose last week.
The market expects the EIA inventory report to be released on Wednesday to show a decrease of 1.9 million barrels in crude oil inventories, but the overall increase in inventories and the trend of increased OPEC+ production still put significant pressure on oil prices.
The U.S. Energy Information Administration (EIA) reiterated that global crude oil prices will face downward pressure in the coming months due to rising inventories, a view that further reinforced the bearish supply outlook.
Market Outlook: Unless key resistance is broken, the bearish tone remains unchanged
(WTI crude oil daily chart source: Yihuitong)
Although geopolitical events provided short-term support for oil prices, oil prices failed to break through key technical levels. Coupled with the bearish inventory outlook and increased OPEC+ production, the overall trend is still under pressure.
Unless WTI crude oil can hold above $66.18, traders are likely to sell on rallies - a trend that will be more pronounced if today's EIA data confirms an increase in inventories. The short-term market outlook remains bearish.
If oil prices can sustainably break through these resistance levels, further upward movement is possible. Subsequent resistance levels are concentrated at $65.41, $66.03, and $66.18. $66.18 is considered a potential trigger point for an acceleration in the upward trend, with a breakout likely targeting $68.70. On the downside, $61.45 is considered initial support, with stronger support at $61.12.
Middle East and Ukraine conflicts drive short-term buying of crude oil
Crude oil prices were boosted early Wednesday morning by reports that Israel had attacked Hamas leadership in Qatar. The attack initially pushed benchmark crude prices up nearly 2%, but gains subsequently pared back gains. Furthermore, geopolitical risks escalated further when Poland intercepted a drone during a Russian attack on Ukraine—the first time a NATO country has directly intervened in such an operation. Despite the heightened tensions, traders noted that no direct supply disruptions had occurred.
Despite the attention generated by the above news, the rise in oil prices failed to gain enough momentum.
Analysts at Nordea Bank (SEB) warned that the "spectre of future oversupply" was still weighing on the market, noting that Brent crude prices had fallen $2 since last Tuesday, suggesting the geopolitical risk premium would be of limited duration unless supply faced an immediate threat.
U.S. tariff threats and Fed policy in focus
Beyond geopolitics, another political issue warrants attention: reports indicate that former US President Trump has urged the European Union to impose 100% tariffs on imports from two major countries, including India. These two countries are major buyers of Russian crude oil, and if their crude oil imports are blocked, it could have a ripple effect on global crude oil flows. However, aggressive sanctions could conflict with inflation concerns and complicate the Federal Reserve's interest rate decisions.
Traders still expect the Federal Reserve to cut interest rates at its September 16-17 meeting, a move that could stimulate economic activity and oil demand. However, until such time as the rate cut occurs, uncertainty over monetary policy will remain a major headwind for the market.
EIA inventory data and OPEC+ output capped oil price gains
Supply concerns remain a key factor affecting trader sentiment. Preliminary data released by the American Petroleum Institute (API) showed that U.S. crude oil, gasoline and distillate inventories all rose last week.
The market expects the EIA inventory report to be released on Wednesday to show a decrease of 1.9 million barrels in crude oil inventories, but the overall increase in inventories and the trend of increased OPEC+ production still put significant pressure on oil prices.
The U.S. Energy Information Administration (EIA) reiterated that global crude oil prices will face downward pressure in the coming months due to rising inventories, a view that further reinforced the bearish supply outlook.
Market Outlook: Unless key resistance is broken, the bearish tone remains unchanged
(WTI crude oil daily chart source: Yihuitong)
Although geopolitical events provided short-term support for oil prices, oil prices failed to break through key technical levels. Coupled with the bearish inventory outlook and increased OPEC+ production, the overall trend is still under pressure.
Unless WTI crude oil can hold above $66.18, traders are likely to sell on rallies - a trend that will be more pronounced if today's EIA data confirms an increase in inventories. The short-term market outlook remains bearish.
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