WTI Price Forecast: Rises to near $85.00 on supply disruption, but remains capped below 100-day SMA
- WTI price jumps to near $84.90 in Wednesday’s early European session.
- The continued exchange of military strikes has intensified concerns over potential disruptions to global energy supplies.
- Oil keeps a bearish tone on the daily chart, with the price remaining capped under the key 100-day SMA.
- The first upside barrier to watch is $85.95; the first downside target is seen at $80.00.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $84.90 during the early European trading hours on Wednesday. The WTI rises as rising tensions in the Middle East raise fears of further disruptions to global oil supplies and international trade.
Concerns over potential supply disruptions grow as shipping traffic through the vital Strait of Hormuz has essentially halted, boosting the WTI price. Furthermore, Yemen’s Houthis said that they have closed the Bab el-Mandeb strait to Saudi-linked shipping in retaliation for the kingdom’s blockade on Yemen and a recent attack on the international airport in Yemen’s rebel-held capital, Sanaa.
It’s worth noting that Bab el-Mandeb is a vital shipping chokepoint, connecting the Red Sea to the Gulf of Arabia. Around 12% of the world’s trade passes through the narrows.
The US Energy Information Administration (EIA) weekly crude oil report is due later on Wednesday. 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.
Technical Analysis:
In the daily chart, the near-term bias of WTI US Oil is bearish as price holds below the 100-day Simple Moving Average (SMA), leaving the recovery capped by this longer-term trend barrier and the upper Bollinger Band around. The Relative Strength Index (RSI) at 64.01 shows firm but increasingly stretched bullish momentum, suggesting that while buying pressure persists, upside is vulnerable to rejection against the overhead technical cluster.
On the topside, immediate resistance is located at the upper Bollinger Band near $85.95, en route to the 100-day SMA at $88.05, which together define a key supply zone that bulls would need to reclaim to neutralize the current cap.
On the downside, initial support emerges at the $80.00 psychological level. The next contention level is seen at the July 17 low of $77.90, followed by the Bollinger middle band around $74.70, ahead of a deeper cushion at the lower band near $63.45, where any extended pullback would be expected to attract dip-buying interest in the broader range structure.
(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.
Artigos Recomendados
