BRENT OIL – overheated geopolitical situation continues to underpin oil prices

Brent keeps firm tone and trading near new three-week high on Wednesday, as the latest attack on the Saudi Aramco headquarters further fueled already overheated situation in Yemen, while Iran announced launch of new tactics to control all traffic through Strait of Hormuz.

Oil prices remain supported by strong supply worries, with most large economies having their oil reserves at the minimums, while significantly reduced supplies cannot cover demand.

Also, the world faces shortage in refined products, particularly in diesel fuel, which reached a record high in the US and hit the highest levels since 2022 in Europe, with the latest US-Russia deal for importing significant quantity of Russian diesel, so far showing no significant positive impact, as oil prices continue to rise.

On the other hand, negative signals are developing on daily chart, as descending 14-d momentum cracks the centreline, Wednesday’s Doji (although with long tail and suggesting that bids are still strong) signaling indecision and Stochastic entered overbought territory.

Initial negative signals still require more work at the downside to be validated, which so far keeps hopes of possible pullback fragile.

Near-term action remains bullish overall but struggles at Fibo barrier at $106.31 (76.4% of $109.77/$95.11) following repeated failure on Mon / Tue, with firm break here to strengthen bullish structure for attack at $108.22 (Sep 24 lower top) guarding key $110 zone.

Rising hourly cloud (currently spanned between $105.35 and $104.81) which tracks the ascend in past four days, offer initial support, followed by broken Fibo 61.8% ($104.17) and ascending 10DMA ($103.52) which should contain potential dips.

Res: 107.27; 108.22; 109.40; 109.77
Sup: 104.81; 104.17; 103.52; 102.44