WTI advances beyond $62 on rising tensions in Middle East
- Tensions in Middle East escalate following US air strikes in Syria and Iraq.
- Profit-taking ahead of year-end could trigger a drop in prices.
Crude oil prices continue to push higher at the start of the new week with the barrel of West Texas Intermediate rising above the $62 mark for the first time since mid-September. As of writing, the WTI was up 0.7% on a daily basis at $62.05.
Eyes on Middle East
Heightened geopolitical tensions in the Middle East and its potential impact on the oil supply after the US targeted five locations in Syria and Iraq linked to Iranian backed militia seem to be providing a boost to oil prices on Monday. In response to the US' airstrikes, "US military aggression against Iraqi soil and Iraqi forces is strongly condemned as a clear example of terrorism," Iranian Foreign Ministry spokesman Abbas Mousavi said.
However, the fact that the WTI gained more than 12% since the start of the month suggests that profit-taking before the end of the year could trigger a selloff.
Commenting on oil's activity, "oil prices have reached their highest level since the Saudi oilfield attack in mid-September" told Margaret Yang of CMC Markets to Reuters on Monday. "Traders are also cautious about profit-taking possibilities."
In the meantime, easing concerns over a protracted trade conflict between the US and China and heightened hopes of the global economy gathering recovery momentum led by a rebound in the manufacturing sector in world's leading economies could help crude oil start the new year on a positive note.
Furthermore, OPEC's commitment to balance the oil market by announcing additional output curbs earlier in December is likely to continue to support crude oil prices.
Technical levels to watch for