Oil moves higher as geopolitical risks escalate, WTI faces key resistance range

US crude prices have converged to their long-term support/resistance range between $80.65 and $82.54. This area is proving once again to attract increased attention as the price of WTI has touched both the upper and lower boundaries in a matter of four days, suggesting resistance and support remain strong.

Oil prices moved higher on Monday morning as tensions between Russia and Ukraine escalated after the surprise attack on a Moscow concert hall on Friday, an act for which Vladimir Putin blames Ukraine. Officials in Kyiv say the claims are absurd but that hasn’t stopped Russia from retaliating with a series of missile attacks. Whilst the tensions in the Middle East have been present for over a year, the escalation in attacks and finger-pointing has traders pricing in a higher risk of supply disruptions given recent attacks on oil infrastructures, which provides short-term bullish support for oil prices

Meanwhile, the latest data showed oil inventories dropping in the US for a second week. Analysts were forecasting inventories to drop by 900 thousand barrels and the actual data showed a drop of almost two million barrels in the week to March 15^th, which implies stronger demand for crude. Robust economic growth in the US is also helping keep oil prices supported, as is improving economic data in China, which has been a source of weakness in previous months.

United States Crude Oil Stocks Change

Source: Trading Economics

Technically, US crude price continues to point higher in the medium term, but traders will need to overcome resistance at $82.54 in the short term. This area continues to provide strong resistance so it may take a few attempts to break above it. If so, the path higher seems pretty clear until $85.50 at which point buyers may be faced with increased selling pressure once again. If buyers are unable to break above the key resistance range, there is short-term support at $80.65, followed by the 200-day SMA at $78.40.

US crude (WTI) daily chart

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