WTI holds steady above mid-$84.00s, Middle East conflict continues to lend support

• WTI gains some positive traction during the Asian session, though lacks bullish conviction.
• Easing concerns about potential supply disruptions due to the Israel-Gaza conflict cap gains.
• Worries about tight global supply and a softer USD continue to act as a tailwind for Oil prices.

West Texas Intermediary (WTI) Crude Oil prices edge higher during the Asian session on Wednesday, albeit lack follow-through amid easing concerns about potential supply disruptions due to the Israel-Palestinian conflict. The black gold currently trades around the $84.65-$84.70 region, up just over 0.10% for the day.

Market participants remain uncertain about the ultimate impact of the Israel-Gaza war and seem convinced that the expansion of the conflict to the wider Middle East is required to send Crude Oil prices higher. This, in turn, holds back traders from placing fresh bullish bets and leads to range-bound price action for the second successive day. US officials, meanwhile, have been pointing to Iran’s role in the Hamas attack on Israel, though are yet to produce any credible evidence.

Furthermore, powerful Iraqi and Yemeni armed groups aligned with Iran have threatened to target US interests with missiles and drones if Washington intervenes to support Israel. This raises the risk of a further escalation of the conflict in the Middle East. Apart from this, worries about tightening global crude supply might continue to act as a tailwind for Crude Oil prices. In fact, oil ministers of six Arab nations reaffirmed to take additional measures at any time to support market stability.

This, along with the prevalent US Dollar (USD) selling bias, might continue to lend some support to the US Dollar-denominated commodity. The recent dovish remarks by several Federal Reserve (Fed) officials pushed back against market expectations for more interest rate hikes. This leads to a further decline in the US Treasury bond yields, which, along with a generally positive tone around the equity markets, drags the safe-haven Greenback to a near two-week low.

Technical levels to watch