WTI climbs over 2% as Strait of Hormuz attacks revive supply concerns
- WTI climbs over 2.5% on Tuesday as renewed attacks near the Strait of Hormuz revive supply concerns.
- Three tankers were hit near the key shipping route over the past 24 hours.
- Technically, WTI retains a bearish bias despite improving momentum indicators.
West Texas Intermediate (WTI) crude Oil edges higher on Tuesday as fresh attacks near the Strait of Hormuz threaten the recovery in shipping seen in recent weeks following the interim US-Iran peace deal. At the time of writing, WTI is trading around $70.44, up about 2.65% on the day.
Iran has repeatedly stated that only vessels using its approved route through the Strait of Hormuz are considered safe and must coordinate with the Islamic Revolutionary Guard Corps (IRGC).
Three tankers were hit in the Strait of Hormuz over the past 24 hours, according to the United Kingdom Maritime Trade Operations (UKMTO). The incidents have revived some of the geopolitical risk premium in the Oil market.
Traders now turn their attention to Wednesday's US Energy Information Administration (EIA) weekly inventory report. US crude inventories have fallen for ten straight weeks, pointing to a tight supply outlook despite improving shipping through the Strait of Hormuz.
Technical Analysis:
In the daily chart, WTI US Oil maintains a bearish near-term bias as it holds below the 200-day Simple Moving Average (SMA) near $73 and well under the 100-day SMA around $86.
The recent bounce from sub-$69 levels has lifted the Relative Strength Index (RSI) toward a neutral 35 zone, while the Moving Average Convergence Divergence (MACD) has crossed marginally above zero, which hints at fading downside momentum but not yet a bullish reversal while price remains capped by these higher averages.
On the topside, initial resistance is located at the 200-day SMA at $73, ahead of the prior horizontal ceiling near $80, with the 100-day SMA at $86 reinforcing a broader medium-term supply area.
On the downside, immediate support is seen at the horizontal level at $67.00, with a deeper bearish extension exposing the next structural floor around $60.00.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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