On Tuesday during Asian trading hours, US crude oil was trading around $59.69 per barrel, having broken through the short-term moving average resistance. On the fundamental side, the continued tension in Iran has raised concerns in the market about potential disruptions to crude oil supply.

Iran is OPEC's fourth-largest oil producer, with a daily output of approximately 3.3 million barrels. A new military conflict would significantly disrupt the global oil supply chain. WTI crude oil prices briefly rose above $59 per barrel yesterday, reaching their highest level since early December, with a cumulative increase of over 6% in the first three trading days.

Brent crude oil prices rose in tandem, indicating that the impact of the Middle East situation on oil market sentiment is rapidly amplifying.

TD Securities commodities strategist Dan Ghali said traders are simultaneously assessing multiple possibilities, including a smooth transition, escalating chaos impacting oil production, or even conflict, with different paths leading to drastically different outcomes for the energy market.

Despite rising geopolitical risks, the global crude oil market remains generally well-supplied. As OPEC+ and major oil-producing countries in the Western Hemisphere increase production, global crude oil inventories continue to rise, putting some downward pressure on oil prices in the medium to long term.

Market research indicates that the current rise in oil prices is more a concentrated release of geopolitical risk premiums than a fundamental reversal in supply and demand fundamentals. This also means that oil prices may face increased volatility at high levels.

From the daily chart, WTI crude oil is showing an overall upward trend with fluctuations. The price has effectively broken through the upper edge of the previous consolidation range and is firmly trading above the short-term moving averages, indicating a significant increase in bullish momentum.

The moving average system is gradually turning bullish, providing support for prices. The $60 level above constitutes significant psychological and technical resistance; a breakout with significant volume could open up further upside potential for oil prices. The $58 level below is a key support area; a breach of this level could lead to a return to high-level consolidation in the short term.

Overall, with momentum indicators not showing significant overbought conditions, oil prices are expected to remain strong in the short term, but the risk of high-level volatility is accumulating.


Editor's Note:

The current rise in WTI crude oil prices reflects more of a risk premium brought about by geopolitical tensions than a fundamental improvement in supply and demand. Until there are clear signs of easing tensions in Iran, oil prices will likely remain strong in the short term. However, if geopolitical tensions ease, oil prices may quickly give back their gains, requiring close monitoring of news developments in the short term.