WTI falls below $85.50 as US-Iran diplomacy hopes rise
- WTI price faces some selling pressure to near $85.30 in Tuesday’s early Asian session, down 4.95% on the day.
- Trump said he is highly unlikely to order fresh attacks on Iran.
- Hopes for a breakthrough in negotiations to end the US war in Iran weigh on crude oil prices.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $85.30 during the early Asian trading hours on Tuesday. WTI falls to its lowest since August amid optimism around diplomatic efforts to end the war in the Middle East, even as attacks in the region continue. Traders brace for the American Petroleum Institute (API) weekly crude oil stock report later on Tuesday.
US President Donald Trump said over the weekend that it was “highly unlikely” he would order extensive strikes on Iran, but added that it depends on the country signing a “very strong agreement.”
On Monday, Qatari Prime Minister and Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said that he met with Trump and Vice President JD Vance in Washington, DC, to discuss advancing talks between the US and Iran.
Al Arabiya source said that a new Qatar-Pakistan proposal would allow Washington to permit Iran to enrich uranium on its soil up to 3.67%, with Tehran agreeing to this limit. The initiative is part of efforts to relaunch negotiations between the two countries, alongside a US offer to release Iranian assets valued between $6 billion and $9 billion if an agreement is reached.
"This seems to have encouraged sellers on the prospects for peace even while the actual fighting is not slowing down," TACenergy analysts said in a note.
Elsewhere, the Houthis claimed responsibility for an attack on Sunday at Saudi oil giant Aramco's corporate office in the heart of the financial district of the capital, Riyadh. The Saudi energy ministry said that debris from the attempted attack blew out windows across several floors.
Oil volatility persists as US-Iran diplomacy remains uncertain
Analysts at Commerzbank note that oil markets "remain volatile as investors assess whether the Democrats' control of Congress could accelerate diplomatic efforts to end the US-Iran conflict." They add that "reports that Iran is reviewing proposals concerning its nuclear programme offered some encouragement, although no comprehensive agreement has been announced and risks to Gulf shipping remain," keeping sentiment fragile.
Technical Analysis: WTI turns bearish bias under the 100-day SMA
In the daily chart, the near-term bias of WTI US Oil is bearish as price holds beneath the 100-day simple moving average (SMA) and the Bollinger Bands lower band, underscoring a break below the recent volatility floor. The Bollinger Bands 20-period SMA and the upper band remain far overhead, highlighting the extent of the current pullback, while the Relative Strength Index (14) at 34.73 flirts with oversold conditions, hinting at persistent downside pressure rather than a confirmed reversal.
On the topside, initial resistance is seen at the 100-day SMA at $86.40, followed by a nearby barrier at the Bollinger Bands lower band around $86.65, forming a tight resistance cluster just above the market. Beyond that, the Bollinger mid-line at $96.35 marks a more significant structural cap, ahead of the upper band near $106.05, which defines a broader ceiling for any stronger corrective recovery. With no clear support levels derived from the provided indicators below $85.30, traders will likely look to prior price lows and psychological handles for potential demand, while the current configuration suggests rallies are prone to being sold as long as price remains below these overhead technical levels.
(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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