WTI recovers to near $95.50 amid Iran peace talk hopes
- WTI price rebounds to near $95.30 in Tuesday’s early Asian session.
- Tehran revealed that contacts between Iran and US to end their eight-month war were continuing, weighing on oil prices.
- Traders will closely watch developments surrounding a diplomatic solution to the US-Iran conflict and API crude oil stockpiles report.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $95.30 during the early Asian trading hours on Tuesday. WTI recovers some lost ground after falling to $94.30, the lowest since 16 October, in the previous session.
Reuters reported that Iran said discussions between the US and Iran to end their eight-month conflict are still ongoing, Reuters reported on Monday. This follows several days of negotiations between Iranian officials and Qatari mediators, which resulted in revised proposals but failed to make a major breakthrough.
"Consultations through mediators are very intensive. We have presented our conditions and proposals and everything depends on the political rationality of Washington," said Iranian Foreign Minister Abbas Araqchi.
US President Donald Trump has previously said that he will not attack Iran before the US midterms. Meanwhile, Iran’s President Masoud Pezeshkian said Tehran is seeking to resolve problems through dialogue.
Ryan McKay, director of commodity strategy at TD Securities, said that the hope of a breakthrough to end the Iran war could have a big impact on crude oil prices because much of the market’s recent gains were risk premiums in anticipation of a possible escalation.
“With that said, so long as there is no concrete conclusion to the war, and tanker and Houthi attacks remain prevalent, we do not anticipate a complete erosion of the risk premium via diplomacy headlines alone,” said McKay.
Traders await the release of the American Petroleum Institute (API) crude oil stockpiles report later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might undermine the WTI price.
Diplomacy headlines chip away at crude risk premium but full unwind seen unlikely
According to TD Securities, recent “headlines and hopes of diplomacy have eroded some risk premium in crude oil markets,” as reports that President Trump is willing to give diplomacy more time have “seen a portion of the geopolitical risk premium priced out of crude oil and petroleum products.” The bank notes that with market “flows elevated, and a large portion of recent upside attributed to a risk premium, these headlines will have an increasingly large impact on the market.” However, TD Securities cautions that “headlines alone are unlikely to shed the whole risk premium” and stresses that “so long as there is no concrete conclusion to the war, and tanker and Houthi attacks remain prevalent, we do not anticipate a complete erosion of the risk premium via diplomacy headlines alone.”
Technical Analysis: WTI maintains a constructive outlook above the 100-day SMA
In the daily chart, the near-term bias of WTI US Oil appears bullish as price holds well above the 100-day simple moving average (SMA) and trades closer to the upper half of the recent Bollinger envelope. However, it remains just under the Bollinger middle band, suggesting the latest advance is pausing before challenging higher territory, while the Relative Strength Index (RSI) around 48 keeps directional momentum broadly neutral.
On the topside, initial resistance is located at the Bollinger middle band at $96.80, with a stronger barrier at the upper band near $104.95. On the downside, immediate demand is clustered around the current pivot zone, ahead of the Bollinger lower band support at $88.70 and the 100-day SMA near $85.85, where a deeper setback would be expected to attract buyers and preserve the broader uptrend.
(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.
추천 기사
