WTI nears year-to-date lows on Russia-Ukraine peace optimism
- WTI extends losses for a fourth straight day as oversupply fears keep sellers in control.
- Russia-Ukraine peace optimism and softer China data deepen demand and supply concerns.
- The technical setup remains bearish, with WTI trading within a descending channel on the daily chart.
West Texas Intermediate (WTI) Crude Oil remains under pressure on Tuesday, extending its decline for a fourth consecutive day as persistent oversupply concerns continue to dominate market sentiment. At the time of writing, WTI is trading around $55.41, down nearly 2% on the day, after briefly slipping to its lowest level since April 9.
The latest leg lower comes as renewed optimism around a potential Russia-Ukraine peace breakthrough fuels expectations that additional Russian crude could return to global markets, adding to an already oversupplied environment.
Demand-side concerns are also resurfacing, as signs of an economic slowdown in China, the world’s second-largest economy, weigh on the outlook. Softer Chinese data, including weaker Industrial Output and Retail Sales, have reinforced worries that Oil demand may remain subdued in the near term.
Attention now turns to the US Energy Information Administration’s (EIA) Crude Oil Stocks Change report on Wednesday.
From a technical perspective, WTI’s broader outlook remains tilted to the downside, with price action continuing to respect a descending channel that has guided the trend since late July.
WTI is trading below its key moving averages on the daily chart, reinforcing the prevailing bearish bias, while prices hover near year-to-date lows, leaving the downside vulnerable.
A daily close below the $55.00 psychological level could open the door for a deeper pullback toward $53.00, the lower boundary of the descending channel, followed by the $50.00 psychological handle.
On the upside, overhead resistance from the 21-day and 50-day Simple Moving Averages (SMAs), near $58.50-$59.10, continues to cap recovery attempts. Any rebound is likely to attract selling interest ahead of the $60.00 level, and unless prices manage a sustained move back above this zone, the near-term technical outlook remains bearish.
Momentum indicators support this view. The Relative Strength Index (RSI) remains subdued near 32, staying close to oversold territory . Meanwhile, the Moving Average Convergence Divergence (MACD) line sits below the Signal line and the zero mark, with the negative histogram widening, suggesting strengthening bearish momentum.
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
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
