WTI trades above $78.00 on continued supply concerns

The ongoing Gaza crisis as well as fresh Houthi attacks are keeping barrel prices high. Monday saw a test of $78.11 a barrel for West Texas Intermediate crude, finding the opportunity to gain momentum as US markets were closed in observance of the federal holiday known as American President’s Day. WTI crude oil is trading at 77.95 per barrel at the time of writing.

Iran-supported Houthis group in Yemen have persisted in attacking Red Sea civilian cargo ships, since November. This conduct is obstructing important commerce lines between Europe and Asia. As trade lines via the Suez Canal remain riskier and under threat, Houthi rebels claimed responsibility for an attack on an oil tanker headed for India over the weekend. On Monday, new claims of strikes were also made.

Given the continuous failure of ceasefire negotiations, the conflict between Israel and Palestinian Hamas in Gaza is certain to continue indefinitely, with no settlement round the corner. Over the weekend, Israel’s negotiation team did not return to the discussions table, and it now seems unlikely that a truce would be reached despite the looming month of Ramadan.

Researchers have noted that although worries about potential supply shortages in the energy markets are still present due to Middle East tensions, the Organization of Petroleum Exporting Countries (OPEC) and its allies, OPEC+, has reached an eight-year high in excess capacity. Analysts also claim that OPEC’s production cycle has enough wiggle room to accommodate an extra 6.4 million barrels per day.

WTI crude has maintained near-term highs, testing $78.00 and bolstered above the 200-hour Simple Moving Average (SMA) near $76.60. WTI crude oil prices have seen a choppy, halting recovery after hitting a low of $67.97 last December, and WTI is still down nearly 17% from last September’s peak bids near $94.00 per barrel.