WTI rebounds from three-week low, reclaims $91.00 as Mideast tensions persist

• WTI catches aggressive bids during the Asian session in reaction to fresh US strikes on Iran.
• In response, Iran’s IRGC targeted the US airbase and warned of a more decisive response.
• A strong pickup in the USD demand might cap the commodity ahead of the US macro data.

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – gains some positive traction during the Asian session on Thursday and recovers a major part of the previous day’s losses to its lowest level since April 21. The commodity touches a fresh daily high in the last hour and is now looking to extend gains beyond the $91.00 mark amid the risk of a further escalation of the Middle East conflict.

Reuters reported fresh US strikes overnight on an Iranian military site that officials believed posed a threat to American forces and commercial maritime traffic in the Strait of Hormuz. Adding to this, Tasnim news agency reported that Iran’s Islamic Revolutionary Guard Corps (IRGC) said it targeted the US airbase in response to an attack near Bandar Abbas airport and warned that any further US attacks would trigger ‘a more decisive’ response. This keeps geopolitical risk premium in play and assists Crude Oil prices in attracting fresh buyers.

Meanwhile, US President Donald Trump said that he is not satisfied with the terms of the deal negotiated with Iran and that he won’t be rushed into a deal, dampening hopes for a diplomatic solution to end a three-month-old war. Moreover, shipping traffic through the strategic Strait of Hormuz remains limited due to Iran’s restrictions on movements and the US naval blockade of Iranian ports. Adding to this, data by the American Petroleum Institute showed that US stockpiles fell for the sixth straight week, lending additional support to Crude Oil prices.

The aforementioned fundamental backdrop seems tilted in favor of bullish traders and validates the near-term positive outlook for the black liquid. However, a strong pickup in the US Dollar (USD) demand, which tends to undermine demand for the USD-denominated commodities, could cap further gains. Traders now look forward to the release of the US Personal Consumption Expenditures (PCE) Price Index and the Prelim US Q1 GDP report for a fresh impetus later during the North American session.