Geopolitical Tensions Propel WTI Prices Amid Red Sea Attacks

Zarith Sofea · 27 Feb 8.3K Views

WTI



Oil prices continued their upward trajectory on Tuesday, building on gains from the previous day, primarily driven by concerns over shipping disruptions in the Red Sea. The attacks on shipping in the region have heightened supply worries, contributing to the rebound in crude oil prices.

As of 0435 GMT, Brent crude futures showed a marginal decrease of 1 cent, settling at $82.52 per barrel. In contrast, U.S. West Texas Intermediate crude futures (WTI) registered a modest 1-cent increase, reaching $77.59 per barrel. The overall sentiment remains bullish, with geopolitical tensions adding to the ongoing global supply-demand dynamics.

The recent attacks in the Red Sea have underscored the vulnerability of key shipping routes, amplifying concerns about potential disruptions to oil shipments. This geopolitical factor has provided crucial support to the rebound in crude oil prices. Traders and investors are closely monitoring the situation in the Red Sea, as any escalation in tensions could further impact oil prices.

Market Position and Entry Suggestions:

Given the current geopolitical tensions and the impact on oil prices, traders may consider adopting a cautious but bullish stance in the oil market. Long positions could be favored, with entry points around current levels for both Brent crude and WTI.

For Brent crude, traders might consider entering long positions if the price approaches the $82.00 level, with a target around $85.00. On the other hand, for WTI, a long position could be initiated near the $77.00 level, with an initial target set at $80.00.

XAUUSD



XAUUSD prices experienced a modest uptick on Tuesday, influenced by a weakening dollar. Investors are closely watching the markets for cues regarding the potential timing of rate cuts by the Federal Reserve, with a key U.S. inflation report expected to provide crucial insights.

As of 0620 GMT, spot gold inched up by 0.1%, reaching $2,033.34 per ounce, while U.S. gold futures registered a 0.2% gain, reaching $2,043.00 per ounce. The overall trend suggests that gold is finding support amid uncertainty, especially as investors seek safe-haven assets in anticipation of central bank decisions.

Market Position and Entry Suggestions:

Gold continues to attract interest as a safe-haven asset, especially with ongoing uncertainties surrounding inflation and potential rate cuts. Traders may consider maintaining a slightly bullish outlook on gold.

For spot gold, entry points for long positions could be considered around the current levels, with a target set around $2,050.00 per ounce. Similarly, for U.S. gold futures, a long position might be initiated with an entry around $2,040.00 per ounce, targeting $2,060.00.

AUDUSD



The Australian Dollar (AUD) showed signs of recovery on Tuesday, reclaiming intraday losses. The improvement was attributed to a positive shift in the S&P/ASX 200 and news that China could potentially lift tariffs on Australian wine by the end of March. Despite opening lower, the AUD managed to gain ground against the USD.

As of Tuesday, the Australian Dollar trades around 0.6540, with psychological support at 0.6500. There is a key support level at 0.6450, and a break below this level could prompt the AUDUSD pair to explore the area around the February low of 0.6442.

Market Position and Entry Suggestions:

The AUDUSD pair appears to be influenced by both domestic and international factors. Traders may consider a cautious approach, taking into account potential volatility in the forex market.

For traders favoring the Australian Dollar, long positions could be considered if the pair maintains support above 0.6500. An entry point around the current level, with a target of 0.6600, might be a strategic move. Conversely, a break below 0.6450 could prompt short positions, with a target set at the February low of 0.6442.


Conclusion

In summary, the oil market remains influenced by geopolitical tensions, especially in the Red Sea, providing support for a bullish outlook. Gold continues to attract investors seeking a safe haven amid uncertainties, while the AUDUSD pair shows signs of recovery but remains sensitive to global economic and trade dynamics


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Paraphrasing text from FXStreet, and Reuters all rights reserved by the original author.

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