WTI jumps to 3-week highs as US-Iran tensions flare up

• Rallied hard on escalating Middle-East tensions after US drone downed.
• Supported by the drop in US crude stockpiles, OPEC meet agreement, USD declines.
• Focus on US-Iran geopolitical tensions and US data for fresh directives.

WTI (futures on Nymex) extended its bullish momentum and went on to hit fresh three-week highs at 55.86 in early Europe, now consolidating the latest uptick around 55.50 levels.

The latest move higher was mainly prompted by the latest reports that fanned the ongoing US-Iran conflict, citing that a US spy-drone was downed by Iran. Both sides confirmed the reports while the Iranian Islamic Revolutionary Guard Corps (IRGC) Commander said that downing of the US drone sends a clear message to Washington. Tensions have been rising between the US and Iran and therefore, in the Middle East after last week’s attacks on two tankers near the Strait of Hormuz.

Moreover, the sentiment around the black gold remains underpinned after the OPEC and other producer agreed on a date to meet and discuss the oil output cuts extensions. Additionally, a bigger-than-expected drop in the US crude inventories also offers fresh impetus to oil bulls. The Energy Information Administration (EIA) said on Wednesday that the US crude stocks fell by 3.1 million barrels last week, compared with the expectations for a draw of 1.1 million barrels.

Furthermore, the oil traders cheer the ongoing slump in the US dollar across its main peers after the US Treasury yields got sold-off into an overtly dovish FOMC. The Fed left the interest rates unchanged but pointed towards rate cuts in the coming months. A weaker greenback makes the USD-denominated oil cheaper for the holders in foreign currencies.

Markets now remain glued to the development around the US-Iran conflict while the US macro news will be closely eyed for fresh USD trades and its eventual impact on the US oil.

WTI Technical Levels