West Texas Intermediate (WTI) crude oil prices have started the new week on a subdued note, failing to react significantly to Iran’s attack on Israel. Despite Iran launching explosive drones and missiles at Israel over the weekend in retaliation for a suspected Israeli attack on its consulate in Syria, the market remains relatively calm. This lack of reaction can be attributed to various factors, including worries about cooling fuel demand and the risk of further escalation of tensions in the Middle East.
The International Energy Agency recently lowered the 2024 global oil demand growth forecast, adding to concerns about a potential slowdown in fuel consumption. Additionally, the US Energy Information Administration’s report showing an unexpected build in gasoline inventories has contributed to the bearish sentiment surrounding crude oil prices. Moreover, the possibility of the Federal Reserve delaying interest rate cuts due to inflation concerns could further hamper economic activity and fuel consumption.
Despite the mixed fundamental backdrop, WTI crude oil prices continue to hover around the $85.00/barrel mark. Traders are currently waiting for Israel’s response to the Iranian strike before making any significant moves in the market. The upcoming days will be crucial in determining the direction of crude oil prices, with the $87.10-$87.15 area acting as a key pivotal point. A sustained strength beyond this level could trigger a bullish rally and extend the recent uptrend observed in the market.
The subdued reaction of WTI crude oil prices to Iran’s attack on Israel reflects the cautious sentiment prevailing in the market. While the risk of escalating tensions in the Middle East remains a concern, factors such as cooling fuel demand and inflation fears are also weighing on the price of oil. Traders are advised to closely monitor developments in the region and key market indicators to make informed decisions on their trading strategies.