Crude oil prices continued with their upward movement on Tuesday as expectations of higher demand in summer provided impetus. The WTI traded at $84.31 per barrel, up by 1.1 percent, while Brent was up by 0.8 percent to trade at $87.30 per barrel. The risk premium on the Israel-Hezbollah conflict also returned to play. The commodity has stayed up in recent days despite successive rises in US crude oil stockpiles and the new driving forces are likely to push prices further up.
Israel and Hezbollah are on the brink of war, with the latter stating that it will continue attacking Israel until a Gaza ceasefire agreement is in place. Israel intensified its attack in Gaza on Monday, and its issuance of evacuation orders in Khan Younis signals possible escalation of the conflict.
The summer demand spike for oil will be in focus later on Tuesday when the American Petroleum Institute releases its weekly inventory figures. However, the more impactful release will be out on Wednesday when the Energy Information Administration (EIA) issues the official figures. Also, the American Automobile Association forecasts that this year’s July 4 holiday travel will be 5.2 percent higher than last year, which will result in increased demand for gasoline.
Elsewhere, Hurricane Beryl, a Category 5 hurricane, made landfall in the Caribbean, becoming the earliest Category 5 hurricane on record. It starts off the hurricane season on a high note, and a continuation of the trend could result in a spike in oil prices.
Technical analysis
The momentum on Brent crude oil price faces upwards, signaling a likely dominance by the buyers if the price stays above 86.63. The movement will likely encounter the first resistance at 87.13, but a continuation of control by the buyers will breach that mark and potentially build the momentum to test 87.55.
Alternatively, a move below 86.63 will favour the sellers to take control. The downward action will likely find support at 86.10, but extended control by the sellers will breach that mark and render the upward narrative invalid. Furthermore, it could strengthen the downside momentum to test 85.75 in extension.
