U.S. crude oil breaks $87, forms ‘golden cross’ pattern in sign of momentum as Middle East tensions boil
Oil prices have rallied to five-month highs and are on pace for a weekly gain as tensions boil in the Middle East with Israel closing embassies over threats from Iran.
The West Texas Intermediate contract for May delivery rose 78 cents, or 0.9%, to $87.37 a barrel, while the Brent June contract gained 88 cents, or 0.97%, to $91.53 a barrel. U.S. crude is up 5.03% for the week while the global benchmark has added 4.62%.
Israel has closed 28 embassies around the world amid fears of retaliatory strikes from Iran, according to multiple reports in Israeli media. Iran has blamed Israel for a missile strike on its consulate in Damascus that killed a top Iranian general. Israel has not claimed responsibility for the strike.
U.S. crude and Brent entered a “golden cross” this week, which is when the 50-day moving average outpaces the 200-day moving average. Investors typically view a golden cross as an indication of positive momentum and the potential for further upside.
The 50-day moving average for U.S. crude of $79.07 a barrel is slightly outpacing its 200-day moving average of $79.02. Brent’s 50-day moving average is $83.74 a barrel, above the 200-day moving average of $83.54.
Tamas Varga, an analyst with oil broker PVM, said the geopolitical temperature has climbed to levels not seen since the Oct. 7 Hamas attack on Israeli civilians.
Ukrainian drone strikes on Russian oil infrastructure, meanwhile, have had a material effect on the supply of crude oil and products, Varga said.
“This is the most salient reason behind the rally that has taken the price of front-month Brent from $72/bbl in mid-December above $90/bbl yesterday,” he said.
Crude oil has rallied this year with WTI up nearly 21% and Brent up 17.7% on mounting geopolitical tensions and expectations that the market will enter a supply deficit.
