Oil prices rose sharply on Monday on concerns that Iran's seizure of a British tanker last week may lead to disruptions in oil supply. WTI futures were up 90 cents to close at $56.50 a barrel. There is a possibility that markets will continue to go higher, even though previous incidents in the Gulf region haven't driven up prices much in the past and a war in the region is not very likely. Nevertheless, speculative money is flowing back into oil in response to the escalating dispute along with signs of falling supply.
After failing to pull back below the 20-period moving average, now acting as support, WTI prices rose sharply to almost the $57 mark, finishing the day though around $56.50. A southern doji was formed on the hourly chart which is known as a bullish pattern. Oil is now poised to go up further at least for the short-term. Note that breaking back below the $55.70 support will put prices under negative pressure, while breaching the $57.30 resistance will lead the price to achieve additional gains and regain the main bullish trend, to start the positive targets of $58.25 and then $60.00 in extension. The RSI looks bullish on the hourly chart suggesting strong upward momentum for the short-term.
Support: 55.70 / 55.00
Resistance: 57.30/ 58.25