BRENT OIL – Bulls consolidate gains after Tuesday’s sharp advance, $100 remains the key target
Brent crude eased into consolidation mode on Wednesday after surging 4.7% in the previous session, its strongest daily advance since July 23. Prices held just below a fresh multi-week high of $96.99, supported by escalating tensions between the United States and Iran and growing concerns over global supply disruptions.
Market sentiment remains firmly underpinned by fears that energy flows could be increasingly constrained as the strategic Strait of Hormuz faces severe disruptions. With strategic reserves in major consuming regions significantly depleted and geopolitical risks intensifying, traders continue to price in a tighter supply outlook.
The bullish technical picture strengthened after Tuesday’s breakout above the 100-day moving average at $91.21 and the 61.8% Fibonacci retracement of the $101.97/$78.10 decline at $92.85. Additional positive signals emerged from the close above the key $94.80 resistance zone, marked by the August 20-21 highs, and Wednesday’s push through the 76.4% Fibonacci level at $96.34.
However, overbought conditions and the formation of a longer upper shadow on Wednesday’s daily candle suggest that bullish momentum may pause temporarily, with traders potentially taking partial profits following the sharp rally before positioning for another leg higher.
Any corrective pullbacks are expected to find solid support above the $92.85 region, now reinforced as a key support level after the recent breakout. Holding above this area would keep the broader bullish structure intact and maintain focus on filling the August 27 gap and challenging the psychological $100 per barrel barrier.
The current geopolitical backdrop, characterized by elevated escalation risks and concerns over further supply shortages, continues to favor higher oil prices in the near term.
Res: 96.34; 96.99; 98.31; 100.00
Sup: 94.51; 92.85; 91.21; 90.90
