WTI eases from three-month top and slips below $92.00; supply concerns to limit downside
- WTI retains a bullish bias as escalating US-Iran tensions keep the geopolitical risk premium in play.
- Supply disruption worries due to clashes in the Strait of Hormuz could further support oil prices.
- Bulls pause for a breather as the market focus remains glued to the release of US inflation figures.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – touches a fresh three-month top, around the $92.50 area during the Asian session on Wednesday, though it lacks follow-through. Nevertheless, the commodity seems poised to climb further amid escalating US-Iran tensions.
In the latest developments surrounding the Middle East crisis, the US attacked Iranian oil tankers in the Gulf of Oman and near Kharg Island. Iran responded by firing over 30 missiles at US forces stationed at the Al Azraq base in Jordan. Moreover, Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that ships in Kuwaiti and Bahraini ports hosting US forces could also be targeted. This keeps the geopolitical risk premium in play, which should continue to act as a tailwind for crude oil prices.
Meanwhile, the continued military confrontations have weighed on shipping traffic through the Strait of Hormuz. Adding to this, Iran’s security chief, Mohsen Rezaei, said that Tehran is preparing to enforce a full blockade around the strategic waterway in response to economic sanctions. Moreover, Iran has threatened to retaliate against any new US attacks on its assets, warning that energy infrastructure across the Gulf was vulnerable, exacerbating fears of a prolonged disruption to oil supplies.
The aforementioned supportive fundamental backdrop validates the near-term positive outlook and suggests that the path of least resistance for the black liquid remains to the upside. Bulls, however, seem hesitant to place fresh bets and opt to wait for the release of US inflation figures for cues about the US Federal Reserve's (Fed) policy path. The outlook, in turn, will play a key role in influencing the US Dollar (USD) and provide some impetus to USD-denominated commodities, including crude oil prices.
WTI daily chart
Technical Analysis
WTI remains well above the 200-day Simple Moving Average (SMA) at $78.52 and is now looking to build on the momentum beyond the 61.8% Fibonacci retracement at $91.88. Momentum indicators stay constructive. In fact, the Relative Strength Index (14) near 66 hints at strong but not yet extreme buying pressure. Furthermore, the Moving Average Convergence Divergence (MACD) indicator is positive and above the zero line, suggesting sustained upside impetus.
Meanwhile, immediate resistance is not seen until the 78.6% Fibo. retracement at $98.69, followed by the cycle high at $107.36. On the downside, initial support aligns with the 50% retracement at $87.10 and the 38.2% level at $82.32. Below these, the 200-day SMA near $78.52 and the 23.6% retracement at $76.40 guard a deeper pullback toward the structural low at $66.84.
(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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