Oil prices surged to a two-month high following an attack on a fuel tanker near Yemen, highlighting the geopolitical risks to crude supplies. West Texas Intermediate (WTI) reached over $78 a barrel, its highest level since November. The vessel, operated by Trafigura Group, was struck by a missile southeast of Aden, Yemen. Futures for refined products, including diesel and gasoline, also saw a two-month high increase.
More than 6% increase in crude prices, the most significant gain since the Israel-Hamas war. Positive fundamental news and support from trading algorithms helped futures surpass key technical levels. However, the nine-day relative strength index for the US benchmark indicated it was overbought, suggesting the surge might be excessive. Elevated tensions in the Middle East, with the US targeting Iran-backed Houthi rebels in Yemen, contributed to the rise. Additionally, drone attacks on refineries in Russia added concerns about crude flows amid the ongoing war in Ukraine.
Oil has experienced an 8% gain in January, supported by a significant drawdown in US inventories and Chinese efforts to stabilize the economy. Nonetheless, traders remain cautious due to potential ample supplies from non-OPEC producers and slower demand growth in major importers like India.
