BRENT OIL – bulls take a breather after almost 5% rally on Tuesday, psychological $100 barrier in focus

Brent consolidates under new multi-week high ($96.99) on Wednesday, following 4.7% rally on Tuesday (the biggest one-day gain since July 23) sparked by renewed hostilities between the US and Iran.

Growing worries about global supply, due to almost total closure of strategic Hormuz strait, the fact that after US and EU almost completely drained their oil reserves (also strategic reserves), as well as fears of stronger escalation of the war, continue to lift oil prices.

Strong bullish signals on Tuesday’s break of 100DMA ($91.21), Fibo 61.8% of $101.97/$78.10 ($92.85), close above lower platform at $94.80 zone (Aug 20/21 tops) and Wednesday’s crack of Fibo 76.4% ($96.34) contribute to bullish near-term outlook.

Meanwhile, overbought conditions and longer upper shadow on Wednesday’s daily candle (so far) provides initial signal that bulls may pause for consolidation / limited dips, as traders may opt for partial profit taking after strong rally and position for fresh push higher.

Dips should find firm ground above $92.85 (broken Fibo 61.8% that reverted to solid support) to keep bulls intact for filling Aug 27 gap and attack at psychological $100 barrier.

Current geopolitical situation (with high risk of escalation and further supply shortage) supports the notion.

Res: 96.34; 96.99; 98.31; 100.00
Sup: 94.51; 92.85; 91.21; 90.90