Crude oil nears $105 as technicals align with fundamentals

Onging tensions in the Middle East continue to provide fundamental support for oil prices.

After last week's drone attack, Saudi Arabia's East-West pipleline may be largely offline for three to five weeks. The pipeline's significance has grown as it offers a route around the Strait of Hormuz, which is partially disrupted.

Simultaneously, the Iran-backed Houthis are expanding their influence along Yemen's Red Sea coastline, raising the danger for vessels transiting the Bab el-Mandeb Strait. Additonally, negosiations intended to reduce restrictions in the Strait of Hormuz have been delayed.

A geopolical risk premium is expected to remain in oil prices due to the combined factors of diminished Saudi export flexibility, threats to two vital shipping lanes, and the potential for a wider military escalation.

Both fundamental and technical outlooks point to bullish conditions.

On Friday, crude oil saw a technical correction lower after climbing from around $80.00 on August 26 to a peak of $104.21. Following a gain of over $24 in a relatively brief span, profit-taking may have prompted a natural pause.

Friday's decline briefly dipped below the 61.8% retracemente levele of $99.70, but buyers re-entered near the $100.00 natural support. This creates a risk-defining zone between $99.70 and $100.00 for buyers seeking further gains.

If prices hold above that zone, buyers maintain strong control. A break below would target the rising 100-hour moving average, which is currently around $98.27. This moving average is expected to continue ascending. For now, buyers remain firmly in command.

On the upside, the potential seems unlimited, especially if fundamental conditions worsen (though uncertainty remains). The next notable target is the May 18 swing high of $105.21. Today's high reached $104.95, close to that level. As of 9:21 AM ET, crude was trading at $104.02.

For targets, a sustained break above $105.21 would reinforce the bullish technical view and point to:

• $107.46 — May 4 swing high
• $110.93 — April 30 swing high

Supportive fundamentals persist alongside a bullish technical stance. Nonetheless, buyers need to hold the $99.70–$100.00 zone. Holding above keeps buyers in control; a break below shifts attention to the ascending 100-hour moving average.