WTI Oil Price Forecast: corrects lower after reaching overbought levels
- WTI Oil slides sharply on Friday as traders book profits following a rally to its highest level since May 21.
- Price holds well above all major SMAs, while the RSI eases slightly from overbought territory.
- The $100 mark caps the immediate upside, while the $90-$92 zone offers initial support.
West Texas Intermediate (WTI) Oil comes under heavy selling pressure on Friday as traders lock in profits following a sharp rally that pushed the US benchmark to its highest level since May 21. At the time of writing, WTI trades around $96.50, down roughly 4% on the day.
Despite the intraday pullback, WTI is on track for a second consecutive weekly gain as the war in the Middle East keeps supply concerns elevated and a sizeable geopolitical risk premium priced into energy markets.
Traffic through the Strait of Hormuz remains severely restricted. Only seven vessels crossed the waterway on Thursday, down from 11 on Wednesday and well below the recent 10-day average of 15, according to shipping data cited by Reuters.
Nevertheless, the Financial Times reported earlier on Friday that foreign ministers from Iran and Gulf countries are preparing to meet in Oman to discuss a temporary arrangement for managing shipping through the Strait of Hormuz.
Technical analysis
On the daily chart, WTI maintains a clear bullish bias as price holds well above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), which fan out below the market and reinforce an underlying uptrend.
Momentum still favours buyers. The Relative Strength Index (RSI) has eased slightly from overbought territory but remains elevated near 66, while the Moving Average Convergence Divergence (MACD) stays positive, suggesting that upside pressure is intact. Meanwhile, the Average Directional Index (ADX) at around 25 points to a moderately strong trend.
On the topside, initial resistance is seen at the psychological $100.00 mark, followed by $105.00. A sustained break above these levels would expose the March high near $113.28, reached shortly after the US-Iran war began.
On the downside, the $90.00-$92.00 region provides immediate support, followed by the 100-day SMA at $85. Below that, the 50-day SMA at $82 and the 200-day SMA at $78 could offer additional support.
(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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