WTI clings to gains near mid-$99.00s, eyes multi-month top amid supply concerns
- WTI sticks to its bullish undertone as intensifying Middle East tensions fuel supply concerns.
- Saudi Arabia shuts down the East-West oil pipeline following drone attacks last Thursday.
- Iran rejects peace talks, saying that there will be no negotiations until its conditions are met.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – catches fresh bids following the previous day's two-way price swings and sticks to its strong intraday gains through the first half of the European session on Tuesday. The black liquid currently trades near the $99.30-$99.35 region, up around 1.30% for the day, and remains within striking distance of the highest level since May 21, touched last Friday.
A widening conflict between Houthis and Saudi Arabia fuels concerns over supply disruptions in the Middle East, which, in turn, continues to support crude oil prices. In fact, Saudi Arabia was forced to temporarily shut down the East-West oil pipeline after drone attacks launched from the territory of Iraq close to the Iranian border last Thursday. Moreover, Iran-backed Houthi forces carried out a large-scale attack on a Saudi air base in Khamis Mushait on Monday.
This comes after Houthis in Yemen seized control of Yemen’s Red Sea coast and the Bab al-Mandab Strait last week. Adding to this, the US-Iran standoff over the Strait of Hormuz backs the case for a further near-term appreciating move for crude oil prices. Meanwhile, Iranian Supreme National Security Council Secretary Mohsen Rezaei rejected the prospect of immediate negotiations with the US, saying that Tehran will not return to talks until its conditions are met.
This dampens hopes for a diplomatic solution to end the war and keeps the geopolitical risk premium in play, validating the near-term positive outlook for crude oil prices. Traders, however, opt to wait for the key FOMC decision on Wednesday, which will drive the Greenback and US Dollar-denominated commodities, including crude oil prices. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the commodity is to the upside.
WTI daily chart
Technical Analysis
The near-term bias stays bullish as WTI holds well above the 100-day Simple Moving Average (SMA) at $85.39 and has reclaimed the 78.6% Fibonacci retracement at $98.57. The Relative Strength Index (14) hovers in positive territory near 70, suggesting strong but stretched upside momentum, while the Moving Average Convergence Divergence (MACD) remains in positive territory with a firm histogram, reinforcing persistent buying pressure.
On the downside, initial support emerges at the 78.6% Fibo. retracement at $98.57, with further demand expected around the 61.8% retracement at $91.78. Below that, the 50.0% retracement at $87.01 aligns with the 100-day SMA at $85.39 to form a broader support band ahead of deeper Fibonacci levels at $82.24 and $76.33, where buyers could attempt to stem any corrective pullback.
(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.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
