Brent crude oil prices declined further on Friday as the market ignored reports of Israel’s strike on Iran. The commodity traded at $86.47 per barrel, having shed 0.73% in intraday trading at the time of writing. Brent initially hit a three-day high of $90.75 in the aftermath of the news, but declined sharply moments after Iran downplayed the impact of the attack.
Brent crude oil prices have registered three consecutive sessions of decline and its losses add up to 4.7% as of this writing. As things stand, the market is more concerned about declining demand than geopolitical tension. The Middle East conflict has recently taken centre stage, after Iran’s direct attack on Israel.
However, both buyers and sellers seem to have locked in the risk premium to the commodity, considering that the conflict has been going on for over 6 months. The lack of significant escalation in the conflict has made most traders numb to the geopolitical pressure. US oil inventories rose higher than expected for the fifth consecutive week, signaling a strong decline in demand.
Also, as the US dollar remains strong, the demand for dollar-denominated crude oil will keep waning as the commodity becomes more expensive. The DXY index, which measures the dollar’s strength against six other major currencies, has been hovering above 105.00 for the last six trading sessions. With the war rhetoric in the Middle East at play, safe haven demand for the US dollar is likely to strengthen the currency further, exerting more downward pressure on oil prices.
Brent price is currently on the downward trend, with the bears in control, as signaled by the weak RSI indicator. The downside is likely to continue if resistance remains at 87.44. That could provide the momentum to break the support at 86.01 and potentially test 85.13 in extension. However, if the price moves above the 87.44 pivot, the buyers will be favoured to take control, with the next resistance coming at 88.43. A continuation of the bullish momentum above the pivot mark could propel further gains to test the next resistance at 89.31.