6% fall in one day: WTI Oil price tumbles on hopes of Hormuz reopening
- The Oil price faces intense selling pressure on hopes of the Strait of Hormuz reopening.
- US President Trump said that the Iran agreement is “largely negotiated”, but there is no rush for the deal.
- More downside looks likely towards $87 if the oil price fails to hold $90.00.
West Texas Intermediate (WTI), futures on NYMEX, are down 6% to near $90 in the European trading session on Monday, the lowest level seen in over two weeks. The oil price clings to opening losses amid hopes that energy supply disruptions due to the prolonged closure of the Strait of Hormuz, a critical passage to almost 20% of global energy supply, will be fixed soon.
Over the weekend, United States (US) President Donald Trump said in a post that an agreement with Iran towards a permanent resolution has been “largely negotiated”, which includes the opening of the Strait of Hormuz.
However, in a later post, Trump said that there is “no rush for the Iran deal”, as time is on Washington’s side. He added, “The Blockade will remain in full force and effect until an agreement is reached.” Meanwhile, Iran has not confirmed any progress in negotiations with the US.
Oil prices rallied by over 68% in almost two weeks when the Middle East war started on February 28. They started cooling down after both Iran and the US confirmed a temporary truce, aiming to reach a permanent resolution, but they are still almost 35% since the onset of the war.
WTI Technical Analysis
The WTI US Oil trades lower at around $90.00 as of writing. The near-term bias stays bearish as price holds well below the 20-day exponential moving average (EMA), which is at $96.80.
The Relative Strength Index (RSI) has slipped toward the low-40s, hinting at persistent downside pressure but stopping short of oversold extremes, which suggests scope for further weakness if the EMA ceiling is not reclaimed.
On the topside, initial resistance is now defined by the 20-day EMA at $96.80, and a daily close above this barrier would be needed to ease the current bearish tone and open the way toward higher levels. Until then, the absence of nearby mapped supports implies that any renewed selling could expose prior reaction lows on the chart, leaving WTI vulnerable to additional downside extension while below the EMA.
Looking down, the WTI Oil price could slide towards the May 6 low of $86.92 if it fails to hold $90.00. A downside move below $86.92 woudl expose the oil price to further downside towards the April 17 low at $78.88.
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.
(The technical analysis of this story was written with the help of an AI tool.)
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
