During the Asian trading session on Tuesday, international crude oil futures fluctuated higher as market risk appetite showed signs of improvement. West Texas Intermediate (WTI) crude traded at $63.73 per barrel, up $0.92 or 1.46%, with an intraday high of $63.87 and a low of $62.49 per barrel.
The current rally has been primarily driven by a combination of geopolitical risks and a weakening US dollar. The security situation in the Red Sea remains tense, compounded by escalating geopolitical risks related to Iran, fueling concerns over potential supply disruptions.
The Middle East accounts for approximately one-third of global crude oil production, and any deterioration in the situation could result in significant supply-side impacts. Since the beginning of this year, oil prices have risen by about 10%, supported mainly by geopolitical premiums.
However, as the risk of direct military conflict has eased temporarily, market sentiment has cooled somewhat.
At the same time, the International Energy Agency recently revised down its forecast for global crude oil demand growth, citing uneven economic recovery as a potential constraint on consumption growth.
This led to some retracement of previous gains. On the supply side, some OPEC+ members believe there is room to restore production increases in April and stated that market fears of oversupply are exaggerated.
The organization will hold a meeting on March 1, where production policy will be the focus. Some representatives noted that the final decision may depend on whether the United States takes military action against Iran or reaches a new nuclear agreement arrangement.
Additionally, US-led talks aimed at ending the Russia-Ukraine conflict began in Geneva, but the likelihood of a swift resolution leading to the full return of Russian crude to international markets remains low.
Over the weekend, energy facilities along the Black Sea coast were attacked by drones, reinforcing the reality of supply risks.
Robert Rennie, head of commodities and carbon research at Westpac, pointed out that while short-term geopolitical factors provide support, supply dynamics are likely to dominate price trends in the coming months.
As global production gradually increases in the first half of the year, Brent crude oil may face pressure to retreat to just above $60 per barrel.
Overall, oil prices are currently in a mixed pattern: geopolitical risks and the decline of the US dollar provide support, while high inventory levels and potential production increases limit gains.
In the short term, prices are expected to remain range-bound, with the market closely watching inventory data, OPEC+ meetings, and developments in the Middle East situation.
From the perspective of the daily chart structure, WTI is oscillating within the range of $62.00–$64.50 per barrel. Prices have regained the 20-day moving average, but the 50-day moving average continues to exert some downward pressure, indicating that bullish momentum has not been fully unleashed.
The area near $63.80 constitutes short-term resistance. If prices break through and stabilize above $64.50, there may be a test of the $65.50 level. Downside support focuses on the $62.50 and $62.00 psychological levels; if these are breached, prices could fall back to the $61.00 zone.
The overall technical structure indicates that the current trend leans more towards consolidation and recovery rather than a trend-breaking rally.
Editorial View:
The main logic driving oil prices currently revolves around the tug-of-war between ‘geopolitical risk premium’ and ‘supply-side pressures.’ In the short term, geopolitical factors provide emotional support for the market.
However, expectations of increased supply are gradually strengthening in the medium term, compounded by slowing demand growth prospects, making it difficult for oil prices to form a sustained unidirectional upward trend. Investors should closely monitor inventory data and OPEC+ policy signals while remaining vigilant about volatility risks stemming from sudden geopolitical events.