Oil Price Forecast: WTI Eyes $100 as Iran Tensions Lift Brent

The price of oil rose again as the Middle East conflict returned to centre of the market. Fresh attacks pushed concerns over additional supply disruptions to the highest level, driving Brent oil to $101.70 and WTI oil to $96.70. The market now sees less potential for a quick ceasefire that keeps a strong risk premium in crude prices.

The key pressure area is the Strait of Hormuz. Any disruption to this route would have an effect on energy flows around the world as a significant proportion of oil and LNG passes through this area. If the closure persists, buyers may expedite their buying to beat the summer demand.

The U.S. inventories report also helped the rally. The level of crude stocks declined more than forecast, indicating solid demand for exports and refining. This is in addition to worries about falling global inventories to critical levels if supply risks persist. Oil prices continue to rally for now. If the U.S.-Iran tensions continue to escalate, prices may rally to the next resistance zone.

WTI Oil Technical Analysis – $100 Breakout Remains Key

The daily chart for WTI crude oil shows that the price rebounded from the $87 support area and reached near the $100 region, which is the resistance of the trend line.

A break above $100 will push WTI crude oil toward $105. Moreover, a break above $105 will push prices toward $120.

The immediate support on Thursday remains the $94.50 to $94 range. As long as this support holds, oil prices may rally toward the $100 region on Thursday. But failure to hold this level may trigger further uncertainty in the short-term direction of the WTI crude oil market.

Overall, the price has been consolidating between $80 and $120 and shows no clear direction.

The weekly chart also shows this uncertainty in the WTI crude oil market. The chart shows strong volatility in crude oil prices between the $80 and $120.

However, the formation of an Adam and Eve pattern above the $55 region before the U.S.-Iran war indicates a strong basing pattern for crude oil.

As long as the $80 support holds in the WTI crude oil market, the next move will likely be higher after these consolidations.

The ongoing supply disruptions after the war have already introduced strong uncertainty and volatility, which may keep prices higher in the medium term.

Brent Oil Technical Analysis – $90 Support Holds the Bullish Structure

Brent crude oil shows a strong rebound from the support region of $90 as seen on the daily chart below.

The resistance from April 2024 highlights this support. The descending broadening wedge pattern started during this period. The breakout of this wedge pattern triggered a strong surge toward the $120 area.

Now, the price is correcting back toward the $90 breakout level. As long as the $80 to $90 support holds in Brent crude oil, the next move in Brent will likely be higher. But it requires a break above $120 to keep the bullish momentum in Brent crude oil.

The chart below shows sharp shadows on the weekly candles. When the price drops, it rebounds higher before Friday and produces shadows on the weekly candles. These shadows highlight the bullish strength.

Oil prices need to close above $100 on a weekly basis to keep the bullish momentum. The Brent crude oil target remains the $125 to $135. A break above this area will keep the bullish momentum and further upside in the Brent crude oil market.

The formation of the Adam and Eve pattern in Brent is like the patterns in WTI crude oil. These patterns show the bottom action in both markets. The next move in Brent oil will likely be higher after this correction. But the price must remain above $80.

Bottom Line

Oil prices remain supported due to Middle East tensions, threats to the Strait of Hormuz and dwindling U.S. crude stocks. WTI and Brent have bounced back from important support levels, but both of the markets require good breakouts to validate the next bull run.

WTI will need to extend above $100 to open the way to $105 to $120, while Brent will require a weekly breakout above $120 and a weekly close above $100 to go to $125 to $135. The overall trend is bullish as long as prices are above $80. Oil prices will remain positive if supply fears persist. Buyers will defend these support levels, which could lead to further price gains.

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