Oil prices returned to the upside on Thursday in reaction to an escalation in the war between Israel and Iran. Benchmark Brent crude oil price was at $78.31 with intraday gains of 3%, with WTI by 2.1% and trading at $75.01 at the time of writing. Brent has gained 10.3% in the last five sessions, while WTI has risen by 4.7% in that time frame.
The divergence is largely attributable to Brent’s comparatively higher sensitivity to Middle East geopolitical risks due to its North Sea origins and the attacks on oil production infrastructure. With its latest rise, oil price is on course to register the third successive weekly gain and Brent already retested late January highs of $78.81.
Meanwhile, the rising prospect of US military action against Iran could escalate the conflict further and add propulsion to the commodity’s upside. Also, the incoming summer season is likely to trigger increased travel, and drive the drive the demand up.
US crude oil inventories declined more than expected in the week ending June 10, coming in at -11.473 million against the forecast estimated decline of -2.300 million. Furthermore, the thawing of trade tariff paralysis between the United States and China increases chances of a stronger global economic growth, which augurs well for oil price.
Oil Price Prediction
On the chart below, Brent crude oil price pivots at $77.35 and the momentum calls for further upside. The first resistance will likely be at $78.60. However, an extended control by the buyers could clear that level and push the price higher to test $80.00.
On the other hand, the momentum could shift to the downside if the price breaks below $77.35. Primary support will likely come at $76.15. Breaking below that level will invalidate the upside narrative. In addition, an extended control by the sellers could send the price lower to test the second support at $75.00.
