Notable rally is seen in oil markets as the week commences, with WTI crude oil marching towards 80 handle. This rise is largely driven by escalating tensions in the Middle East. Over the past weekend, a drone strike in Jordan, which has been linked to Iran, resulted in death of three US troops and injuries to as many as 34. Adding to regional instability, ongoing aggressive maritime attacks by Yemen’s Houthi rebels in the Red Sea continue to disrupt traffic and heighten geopolitical tensions.
Technically, WTI is now pressing an important near term cluster resistance at 38.2% retracement of 95.50 to 67.79 at 78.37, and 100% projection of 67.79 to 76.02 from 70.46 at 78.69. Sustained break of this level will solidify the case that fall from 95.50 has completed at 67.79.
In this bullish scenario, rise from 67.79 is at least a correction to fall from 95.50, with prospect of being the third leg of the pattern from 63.67 low. In either case, next target will be 161.8% projection at 83.77.
Nevertheless, rejection by 78.37/69, followed by 75.93 will argue that rebound from 67.79 has completed already, and keep near term outlook neutral at best.
