Suspense Builds: Will Oil Prices Break Through $110?

Oil prices are currently in an intriguing phase. Brent is hovering around US$106 and WTI around US$93, following a gain of over 6% across three sessions. Fundamentally, sentiment remains bullish as Middle East conflicts heighten the risk of supply disruptions. However, after such a rapid rise, the market is beginning to factor in the possibility of a short-term correction.

On the fundamental front, geopolitics remains the primary driver of the oil rally. Houthi attacks on Saudi Arabia and escalating risks to tankers near the Strait of Hormuz have prompted the market to price in an additional risk premium. As long as energy supply routes remain under threat, investors will likely be cautious about unwinding bullish positions. The caveat, however, is that if the conflict does not significantly disrupt oil flows, this risk premium could gradually dissipate.

Conversely, there are factors that could act as a brake on price increases—specifically, the potential for increased Russian diesel supplies and efforts by producing nations to secure alternative distribution routes. This means the market is currently grappling with two opposing forces: supply risks pushing prices up versus additional supply keeping prices in check. Consequently, oil volatility is likely to remain high, making it difficult for prices to establish a clear, one-way trend.

From a technical perspective, the US$100–102 range for Brent is a critical zone to watch. As long as prices hold above this area, the bullish structure remains relatively intact. Meanwhile, the US$107–110 range serves as a key resistance zone. If Brent breaks through US$110 with strong momentum, the door opens for further gains. Conversely, a failure to breach resistance—followed by a drop below US$100—could signal that bullish momentum is losing steam.

Newsmaker Opinion: For now, oil retains a bullish bias, though it is not immune to a correction. As long as the Middle East conflict remains unresolved, any price decline could still be viewed as a correction, provided Brent holds above US$100. However, should tensions ease and supplies return to normal, selling pressure could intensify. Thus, US$100 serves as a key support level, while US$110 acts as the critical threshold determining whether the oil rally continues or stalls. (asd)

Source: Newsmaker.id