WTI declines as US-Iran deal hopes and Hormuz outlook weigh on Oil
- WTI drops over 2% as US-Iran deal speculation builds.
- Traders focus on Hormuz headlines and Tehran’s pending response.
- Strong US jobs data fails to offset weak fuel sentiment.
West Texas Intermediate (WTI), the US crude Oil benchmark, falls some 2.49% on Friday, poised to end the week with losses of over 7.39%, amid growing speculation that the US and Iran will reach an agreement to end the conflict.
Oil heads for weekly loss as Hormuz reopening hopes grow
Market mood remains positive, even as tensions rise after the US and Iran exchanged fire overnight. In the meantime, Washington waits for Tehran’s response to the 14-point memorandum, which, according to US Secretary of State Marco Rubio, would be ready later in the day.
Analysts cited by Reuters reported that the Oil trade is mostly focused on Iran’s war headlines and a possible reopening of the Strait of Hormuz.
In the meantime, Baker Hughes reported that drillers added Oil and natural gas rigs for the third consecutive week. The rig count, an indicator of future output, increased by one to 548 in the week to Friday, yet, according to Baker Hughes, it remains down 30 rigs, or 5%, compared to this period a year ago.
This, along with a possible reopening of the Strait of Hormuz, should push WTI prices lower. In that outcome, inflationary pressures would ease, opening the door to further easing, particularly by the Federal Reserve.
Otherwise, an escalation of the conflict would open the door to further upside and push WTI prices back above $100.
Data from the US showed a strong jobs report, with Nonfarm Payrolls in April crushing estimates, rising to 115K, well above the expected 62K. At the same time, US Consumer Sentiment, as measured by the University of Michigan, deteriorated to its all-time low in May, as households feel the pain from high gasoline prices.
WTI Price Forecast: Technical outlook
In the daily chart, WTI US Oil trades at $92.47. The contract holds a constructive near-term bias as price remains above the latest triple simple moving average cluster around $91.98 and comfortably above both active rising trend-line supports, suggesting the broader uptrend is intact despite the recent pullback from this month’s highs. Momentum is more neutral, with the 14-day Relative Strength Index easing to about 48, hinting at consolidation rather than outright exhaustion on either side.
On the downside, initial support is seen near the $92.00–$92.50 area, where spot trades just over the clustered simple moving averages at $91.98; a sustained break below here would expose the higher rising trend-line region around $89.00, ahead of the deeper structural uptrend support tied to the earlier line near $80.82. With no clear overhead reference levels in the dataset, any recovery above the current area would effectively extend the existing uptrend, leaving the focus on whether buyers can continue to defend the nearby moving average and trend-line floors as volatility rebuilds.
(The technical analysis of this story was written with the help of an AI tool.)
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
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
