WTI recovers part of its losses, caught between technical rebound, diplomatic optimism

• WTI gains around 1.6% on Wednesday after the sharp sell-off seen in the previous day.
• Progress in talks between Washington and Tehran eases fears of prolonged supply disruptions.
• Investors now turn their attention to the weekly US Crude Oil inventory data.

West Texas Intermediate (WTI) trades around $75.50 on Wednesday at the time of writing, up 1.56% on the day, as investors take advantage of a technical rebound following the more than 5% decline recorded in the previous day. However, the recovery remains limited by diplomatic progress between the United States (US) and Iran, which is fueling hopes of the reopening of the Strait of Hormuz and reducing concerns over global Oil supply disruptions.

Talks between Washington and Tehran continue to advance after Qatari officials said that an interim agreement had been drafted to restore navigation through the strategic waterway. US President Donald Trump has also paused planned military strikes against Iran to give negotiations a chance, while reiterating his call for the Strait of Hormuz to reopen as soon as possible.

At the same time, broader regional efforts are underway to secure key shipping routes. Iran is reviewing a proposal that would allow European countries to participate in mine-clearing operations in the Strait of Hormuz, while discussions with Oman continue to safeguard trade routes. Meanwhile, Saudi Arabia is holding indirect talks with Yemen's Houthi rebels in an effort to prevent further escalation in the Red Sea.

Traders are also monitoring market fundamentals. Data from the American Petroleum Institute (API) showed an unexpected increase in US Crude Oil inventories, shifting the focus to the official Energy Information Administration (EIA) report due later in the day. Another build in inventories could remind markets that, despite geopolitical tensions, the balance between supply and demand remains a key driver of Oil prices.

In the short term, the Oil market continues to balance the prospect of easing geopolitical tensions, which could improve global supply conditions, against investor caution as the regional environment remains fragile.

WTI US Oil technical analysis

In the one-hour chart, WTI US Oil trades at $75.67, holding a bearish near-term bias as price remains capped beneath the 100-period simple moving average (SMA) at $79.55 and the 200-period SMA at $81.62. The rebound from Tuesday’s lows is more a pause within a broader corrective phase than a trend reversal, while the Relative Strength Index (RSI) at roughly 49 stays near the neutral line, hinting at indecisive momentum rather than a strong directional push.

On the topside, initial resistance emerges at the horizontal barrier, previously a support level, near $77.40, ahead of the 100-period SMA at $79.55 and the 200-period SMA at $81.62, where a dense supply zone is likely to restrain further recovery attempts. On the downside, the next meaningful support is located at the prior low around $73.51, and a sustained break beneath this level would reinforce the prevailing bearish structure and open the door to deeper losses.

(The technical analysis of this story was written with the help of an AI tool. Know more.)