Brent Crude Oil Prices Surge Amid Middle East Conflict Concerns
Brent crude oil prices have maintained a position above $90 for five successive trading sessions as of Thursday’s close, owing to concerns that the military action by Israel in Gaza could potentially expand into a more significant regional conflict.?
Since hitting a low of $72 in June, Brent's price has surged by nearly 30% and has experienced significant fluctuations following Hamas's October 7 attack on Israel. The possibility of a broader conflict in the Middle East is pushing oil prices to new peaks, with $95.91 as the nearest resistance point for Brent, also marking the highest price for 2023. This suggests that if the upward trend persists, Brent could hit record highs for the year.?
Despite the potential increase in oil production by 200,000 barrels per day due to the US lifting sanctions on Venezuelan oil, gas, and gold production after four years, this development is still unfolding. Traders are evaluating how much and how quickly additional Venezuelan oil could impact the markets. A report indicates that OPEC+ does not foresee the need for any policy changes in response to this development. Some analysts also suggest that Venezuela may not be able to significantly boost its output, implying that any relief in oil prices may be short-lived.?
Furthermore, concerns that the conflict could disrupt fuel supplies offset the continuous pressure from rising global interest rates. Interest rate increases could slow down the economy and reduce fuel demand.?
As a result, the Brent reference is on the rise, operating above the support of $90 and showing a strong acceleration in price. This gain amounts to more than 11% after reaching lows in October, around $83.8, where its 100-day moving average is currently located.?
Volatility has indeed increased as the distance between the upper and lower Bollinger bands has widened significantly since the beginning of the month. The upper band is very close to the resistance of $95.91, which is the nearest level Brent's price will have to face if it wants to reach the target of $100, a level some analysts have been announcing as a possible year-end target for 2023. On the lower side, in addition to the support of $90, there is the base of the Bollinger bands at $89.78, additional support at $87, and finally, the 100-day moving average that is close to coinciding with the lower limit of the bands at $83.8.?
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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