WTI Price Analysis: Advances to $73.50 as Middle East tensions deepen

• WTI rallies above $73 as investors turn cautious about deepening Middle East crisis.
• Soft China Q3 GDP data could stall rally in the oil price.
• The USD Index climbs above 103.00 as bets supporting a Fed’s rate cut in March have eased slightly.

West Texas Intermediate (WTI), futures on NYMEX, has climbed to near $73.50 as investors see a strong tightening of oil supply amid fears of more airstrikes by Iran-backed Houth rebels on commercial shipments from Red Sea including US ships. The Houthi group has threatened to continue attacks on merchant vessels in retaliation for airstrikes launched by the US military group on forces in Yemen.

The oil price delivers a sharp recovery despite advancing US Dollar Index (DXY). The USD Index has printed a fresh weekly high above 103.00 as investors are reconsidering their bets in favour of rate cuts by the Federal Reserve (Fed) in March.

Meanwhile, investors await China’s Q4 Gross Domestic Product (GDP) data, which will be published on Wednesday. The annual GDP is projected to deliver a robust growth of 5.3% against 4.9% reported earlier. While quarterly GDP growth is seen at 1.0%, slower than 1.3% increase in the previous quarter due to vulnerable economic prospects.

It is worth noting that China is the leading importer of oil in the world and a sharp recovery in the Chinese economy will strengthen the oil price.

WTI oscillates in a Symmetrical Triangle chart pattern formed on a four-hour scale, which indicates a sharp contraction in volatility. The 200-period Exponential Moving Average (EMA) around $73.60 is acting as a barricade for the oil price bulls.

The Relative Strength Index (RSI) (14) continues to oscillate in the 40.00-60.00 range, which indicates that investors await a potential trigger.

A bullish reversal could emerge if the asset breaks above January’s high of $75.28. This would drive the asset towards December 26 high at $76.22, followed by November 20 high at $78.46.

On the flip side, the oil price could face a sell-off if it drops below January 10 low around $71.00. This would drag the asset towards the psychological support of $70.00 and December 7low of $69.00.

WTI four-hour chart