Oil prices extended their first weekly gain since early July, with West Texas Intermediate (WTI) crude advancing to $79 per barrel and Brent crude surpassing $81. This increase comes amid rising geopolitical tensions, specifically Iran’s response to the recent assassination of a Hamas leader in Tehran. Iranian state media reported military exercises near the Iraqi border, signaling Tehran’s determination to retaliate against Israel.
Monday’s gains also followed significant reductions in market positioning. Money managers now hold the smallest net-long position in ICE Brent since the data began in 2011, and bullish positions on US gasoline and diesel are at multiyear lows. The crude market’s rebound follows a dip to a seven-month low early last week and is buoyed by a recovery in equity markets.
Technical and Economic Factors
WTI crude crossing above its 200-day moving average on Monday contributed to the price increase. However, Harry Tchilinguirian from Onyx Capital Group noted that while geopolitical risks related to Iran may push prices up temporarily, the market needs solid economic data to maintain stability.
Traders are awaiting further market reports this week for clarity on supply and demand. OPEC has recently lowered its forecasts for global oil demand for this year and next, and the International Energy Agency (IEA) is set to release its monthly outlook on Tuesday. Additionally, US inflation data will be released on Wednesday, which could impact market dynamics.
In summary, oil prices are currently rising due to geopolitical tensions and adjustments in market positioning. Traders are closely monitoring upcoming economic data and market reports for further insights into supply and demand trends.
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