WTI consolidates below $90.00 as investors seek fresh development on Middle East tensions
- WTI rose to near $90.00 due to escalating Middle East tensions.
- The announcement of SPR refilling has improved the appeal of oil.
- Fed Powell supported keeping interest rates unchanged due to rising US Treasury yields.
West Texas Intermediate (WTI), futures on NYMEX, trade back and forth below the crucial resistance of $90.00 in the London session. The upside bias for oil prices is bullish due to persistent risks of Israel-Palestine conflict escalation after the hospital blast in Gaza.
Israel's defense chief Yoav Gallant has instructed their troops to prepare for entering Gaza, aiming to dismantle the Palestine military group. The oil prices are on surge due to substantial risks of Iran’s intervention in the Middle East tension, which could result in a decline in oil supply in an already tight oil market.
Meanwhile, the announcement of the refilling of the Strategic Petroleum Reserve (SPR) by the US Department of Energy (DOE) has prompted the oil price outlook. The DOE looks set to deliver six million barrels in the December-January period. Investors should note that the US government has drawn 200 million barrels since the onset of the Russia-Ukraine war in an attempt to combat higher gasoline prices.
The appeal for the oil price has also improved due to neutral guidance on interest rates by Federal Reserve (Fed) Chair Jerome Powell in his speech at the New York Economic Club. Jerome Powell supported keeping interest rates unchanged in the 5.25-5.50% range as multi-year high US Treasury yields are effectively catering Fed’s job.