Oil Prices Climb Amid US-Iran Tension Concerns

• U.S. crude inventories rose 8.5 million barrels to 428.8 million barrels last week, far exceeding analyst expectations of a 793,000-barrel increase
• Analysts suggest a sustained break above $65-$66 requires further Middle East escalation, while de-escalation could trigger profit-taking toward $60-$61 in WTI
• Upside price bias expected to continue due to U.S.-Iran tensions, tighter Russian oil sanctions, and a resilient U.S. economy supporting oil demand expectations

Oil Prices Rise on US-Iran Tensions; Strong US Economy Supports Demand

Market Movement:

Oil prices climbed Thursday morning amid escalating US-Iran tensions. Brent crude rose 0.49% to $69.74 per barrel, while WTI increased 0.57% to $65.00. Both benchmarks also gained Wednesday, with Brent up 0.87% and WTI up 1.05%.

Key Drivers:

Geopolitical concerns dominated markets as President Trump and Israeli PM Netanyahu reached agreement on Iran strategy, though negotiations with Tehran continue. Trump indicated Tuesday he may send military assets to the Middle East if diplomatic talks fail. US and Iranian diplomats held indirect discussions in Oman last week, with the next round pending.

Technical Outlook:

Analyst Tony Sycamore of IG noted that WTI sustaining above $65-$66 would require further Middle East escalation, while de-escalation could trigger profit-taking toward $60-$61.

Economic Data:

US employment data showed unexpected acceleration in January with unemployment falling to 4.3%, signaling economic resilience. Mingyu Gao of China Futures emphasized the "resilient US economy is also supporting oil demand expectations."

Supply Factors:

US crude inventories surged 8.5 million barrels to 428.8 million barrels last week—significantly exceeding the Reuters poll forecast of 793,000 barrels. This substantial build temporarily capped price gains.

Outlook:

Analysts expect prices to remain biased upward, supported by US-Iran tensions, tighter Russian oil sanctions, and expectations of reduced exports. Global inventory builds have generally fallen below expectations year-to-date, while net long positions in crude futures haven't reached overweight levels.