Written by: Basant El-Farmawy
Oil prices witnessed a noticeable increase during the week's trading, as Brent crude and West Texas Intermediate (WTI) resumed achieving strong gains driven by escalating geopolitical risks in the Gulf region and declining crude inventories in the United States, overcoming the wave of profit-taking that hit the markets in previous sessions.
The impact of geopolitical risks on supplies
The markets received strong support from the continuation of tensions in the Gulf region and the stumbling of diplomatic mediation efforts, coinciding with reports of attacks targeting vital facilities in the Kingdom of Saudi Arabia. These factors kept supply disruption fears at the forefront of traders' concerns, which weakened the impact of appeasement attempts and restored buying momentum to the markets after temporary selling operations.
Inventory data and market expectations
On the fundamental side, data released by the American Petroleum Institute boosted the upward wave, showing a significant drop in US crude inventories alongside a decline in gasoline and distillate inventories. Markets are awaiting the release of the official government report to obtain more accurate indicators of supply volume and global demand, amid continuous efforts to increase global fuel production.
Technical outlook for futures prices
Technical analyses of West Texas Intermediate and Brent crude contracts indicate that the general trend remains upward in the near term, despite the appearance of potential signals for a trend reversal due to profit-taking operations. The path of prices during the coming period depends on the ability of buyers to break through key resistance levels, or bounce from technical support areas if the markets witness a temporary correction.
