⛽ WTI erases daily gains

Oil prices launched new week's trade higher following drone strike on the US military outpost in Jordan over the weekend. While US forces in the Middle East have been regularly targeted by Iran-linked militias since the beginning of Israel-Hamas war but this was the first attack in which US serviceman were killed. According to media reports, 3 US soldiers were killed in the attack while dozens were wounded. Biden administration was quick to blame the attack on Iran-linked groups and vowed retaliation in the manner and time of its choosing. This, in turn, has reignited fears of a broader conflict in the Middle East with a risk of direct clash between the United States and Iran.

Oil reacted to the news with WTI (OIL.WTI) opening with an around-1% bullish price gap after the weekend. However, as Iran distanced itself away from the strike and US authorities stressed they are not seeking an escalation and a war with Iran, gains started to be erased. WTI erased all the gains and is now trading almost 2% lower on the day.

Taking a look at OIL.WTI chart at D1 interval, we can see that price attempted to break above the $78.50 resistance zone today but failed to do so, and a quick reversal occurred. Moreover, price has also pulled back below 200-session moving average (purple line), which acted as a resistance in November 2023. The next support level to watch should the pullback deepen can be found in the $75.00 area.

Source: xStation5