Oil is capping the week with a volatile session. Prices climbed and traded as much as 3% higher earlier today in response to US and UK airstrikes at military targets linked to Iran-backed Houthi in Yemen. This was the first direct attack of US-led coalition forces on Houthi targets inside Yemen and triggered fears of the Middle East situation escalating further, with a risk of disruption to oil supply. US and UK authorities said that strikes were retaliation for attacks on commercial ships in the Red Sea and were aimed to deter Houthi from further attacks on global trade. However, Houthi has already said that they will continue to attack 'Israeli-linked ships' and also will retaliate against US and UK interests in the region.
However, price halted advance in the early afternoon as situation has been rather calm since overnight bombing campaign as it had no impact on physical oil market. Nevertheless, tensions are on the rise and Middle East remains an important factor to watch for oil traders. Armed conflict between the West and Iran or resumption of hostilities between Yemen and Saudi Arabia are scenarios that would be very disruptive to the oil markets, but fortunately those are currently low-probability scenarios and all parties involved want to avoid them.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appTaking a look at Brent (OIL) chart at H1 interval, we can see that price broke above $80 resistance zone earlier today but bulls failed to sustain the move. A reversal occured in the early afternoon and prices slumped over 3% off the daily highs. OIL broke back not only below $80 area but also below $78.75 support zone and the lower limit of local market geometry at $78.40. Price is currently testing 50-hour moving average (green line) with upward trendline being located slightly lower, in the $78 area.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.