Brent oil hit two-week high but faces strong headwinds at $110 zone

Brent oil price spiked to two-week high in early Monday trading, extending last week’s 4.5% advance, driven by fragile situation in the Middle East and fading prospects for peace after the latest attack on a nuclear power plant in the UAE.

Fresh extension of the bull-leg from $96.09 (May 7 higher low) probed through psychological $110 barrier and peaked at $111.97, but quick easing below $110 signals that bulls might be running out of steam.

Fading positive momentum and overbought Stochastic on daily chart contribute to scenario of limited profit-taking and positioning for fresh push higher (if fundamentals do not improve).

Dips should ideally find solid ground at 106.20/105.80 zone (Friday’s low / converged 10/20DMAs) to provide better levels to re-enter bullish market for sustained break above $110 and possible acceleration towards $115.26 (May 4 peak), guarding key barriers at $120 zone.

Caution on loss of supports at $106 zone that would risk deeper pullback and expose daily Tenkan-sen ($104.02) and daily cloud top ($102.33).

Res: 111.59; 111.97; 113.82; 114.41
Sup: 108.50; 106.72; 105.80; 104.02