Oil market has been rather calm this week. Crude prices dropped at the beginning of the week as Israel held off on the land invasion of Gaza Strip and there was no escalation and spillover of the Israel-Hamas war into other countries in the region. 

However, as the weekend is approaching and markets will be off, there seems to be some positioning for a possible escalation and jump in oil prices on Monday open as worrying media reports hit the wires. The United States said that it has struck two weapon and ammunition depots used by Iranian-backed groups in Syria in retaliation for recent attacks on US troops in the Middle East. On top of that, it was reported that a missile hit a medical facility in the Egyptian town of Taba near the Egypt-Israel border. Some media quickly claimed it was an Israeli missile while other media pointed out that a nearby Israeli port of Eilat was targeted by Hamas missiles as recently as Wednesday. However, no party has officially claimed responsibility for the strike in Egypt.

Situation remains tense and the risk of miscalculation and conflict spreading across the region remains real, and today’s pick-up in oil prices seem to reflect this risk. Taking a look at Brent chart (OIL) at the H4 interval, we can see that the price managed to climb back above the $88 price zone today. A strong resistance zone can be found in the $90-91 area, marked with 50- and 200-period moving averages as well as previous price reactions.

Source: xStation5