Crude Oil sees a spike on Gaza conflict, WTI pings $88.50 before slipping back

• WTI Crude Oil is seeing green for Wednesday despite broader market sentiment taking a hit.
• US Crude prices initially rose nearly $2/barrel on the day before broad-market risk aversion restrained prices.
• Middle East geopolitical tensions from the Gaza Strip escalation continue to weigh on energies.

West Texas Intermediary (WTI) Crude Oil prices are seeing further gains on Wednesday despite global markets seeing a broad turnaround into safe havens. 

Following a rocket strike on a Gaza hospital that left over 500 civilians dead and both Israel and Hamas blaming the other side for devastating attack, investors are getting cold feet once more as geopolitical tensions surrounding the Gaza Strip conflict continue to draw taut.

Middle East tensions, US crude supply drawdown keeping barrel bids pushed into the green

As stability in Gaza continues to deteriorate, markets are increasingly concerned that tensions could rise to the point that the altercation could spill over into knock-on political disputes between the US and neighboring countries to the region. The nearby Strait of Hormuz, a major global energy supply chokepoint that sees a fifth of all global crude shipments, could see negative impact if geopolitical tensions continue to mount.

Adding to Crude Oil price pressures, US Crude Oil inventories reported a steeper-than-expected drawdown on Wednesday, with the Energy Information Administration's (EIA) barrel count seeing a decline of 4.491M barrels for the week into October 13th, much steeper than the forecast -0.3M drawdown and eating significantly into the previous week's 10.176M barrel buildup.

WTI Technical Outlook

WTI Crude Oil barrels touched a fresh daily high of $88.50 before slipping back into the $87.00 neighborhood as risk aversion weighs on markets, but Middle East tensions are keeping Crude prices bid into the green for Wednesday.

Daily candlesticks are struggling to shrug off the 50-day Simple Moving Average (SMA) currently parked near $85.13, and Wednesday's upside action sees WTI knocking on the underside of a rising trendline from late June's swing low into $67.14.

Despite WTI recently slipping from 2023's highs of $93.98 set back in September, Crude Oil remains in a bullish stance, with prices facing a bullish extension from the last turnaround from the $82.00 handle.

WTI Daily Chart

WTI Technical Levels