This month, the price of WTI crude oil has surged by more than 7% while Brent has surged by almost 10%. The upward movements of the crude oil may be attributed to the ongoing risks in the Middle East. The Syrian crisis has escalated, leading the US, UK, and France to launch targeted attacks. Russia responded to the attacks by calling a UN security council.
Investors believe that the escalation in Syria may lead to a bigger conflict that would lead to potential disruption in the oil market. It would interfere with the oil production, refinery, and transportation thus, increasing its price.
After reaching a three-year high of almost $68 last week, the WTI retraced slightly to a low of $65. This was an expected move as some bullish investors moved to take profits. Others exited their long positions after Trump reduced his rhetoric on Syria and Russia.
This week traders will continue following up on the Syrian and Russian situation. They may also focus on the crude oil inventories data that will be released on Wednesday. After missing the estimates last week, investors expect inventories in the US to fall by 0.189M barrels.
Nonetheless, traders should wait for the crude oil to lose the upward momentum and test the 50% Fibonacci Retracement level of $64.77.