WTI extend opening gains amid fears of further energy supply risks

Oil prices gain significantly above $99.50 as the closure of Saudi’s major pipeline prompts fears of energy supply risks.
Saudi closes its major pipeline after drone attack from Iran-aligned Houthis.
The scheduled meeting between Tehran and Gulf states to secure buy-in for a temporary deal to manage Hormuz has been postponed.

Sagar Dua FXStreet

West Texas Intermediate (WTI), futures on NYMEX, extends its opening gains in the European trading session on Monday, trading almost 3% higher slightly above $99.50.

Oil prices have gained significantly as the precautionary shutdown of a major Saudi pipeline late on Friday following recent attacks, and the postponement of today's planned meeting between Iran and other Gulf states to discuss the creation of a temporary shipping corridor through the Strait of Hormuz, analysts at Deutsche Bank reported.

According to CNN, Saudi Arabia’s Ministry of Energy said in a statement posted to its website Friday that the pipeline had been attacked and “was shut down as a precautionary measure.” On Thursday, Iran-backed Houthis launched various drones in an attempt to capture strategic points along the Red Sea.

Meanwhile, the cancellation of scheduled meeting between Iran and Gulf states aimed at securing buy-in for a temporary deal to manage shipping through the Strait of Hormuz has also prompted the rally in oil prices. Regarding the meeting, Iran’s Foreign Ministry spokesperson said, “Saudi Arabia insisted for meeting between Tehran and Gulf powers in Oman not to take place.”

Deutsche Bank noted that these developments have reinforced “market concerns around regional supply security and key shipping routes”.

WTI Technical Analysis

In the daily chart, WTI US Oil trades at $99.45, extending a strong bullish phase with price holding well above the 20-day exponential moving average (EMA) at $89.92. The positioning of spot comfortably over this key trend indicator suggests underlying demand remains firm, while the Relative Strength Index (14) at 69.63 hovers near overbought territory, hinting that the latest rally could be entering a more mature stage even as upside momentum stays intact.

On the downside, initial support is seen at the 20-day EMA at $89.92, which underpins the broader uptrend and would be watched on any corrective pullback.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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

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.

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