WTI Oil rebounds as supply tensions overshadow demand concerns

West Texas Intermediate (WTI) US Oil rebounds on Friday and trades around $80.80 at the time of writing, up 0.40% on the day. Oil prices recover some of their losses after two days of correction as investors remain concerned about energy supply disruptions in the Middle East.

Tensions surrounding the Strait of Hormuz continue to support prices. Commodity vessel traffic picks up slightly on Thursday but remains well below levels seen before the conflict. According to Kpler data cited by Reuters, the number of transits remains below the daily average of 12 recorded so far in August, compared with around 130 to 140 vessels per day before the war.

Supply risks also remain elevated around the Bab el-Mandeb Strait. Together with the Strait of Hormuz, these two waterways account for around 27% of global energy supply, maintaining a significant risk premium in Oil markets as long as navigation remains severely disrupted.

On the diplomatic front, Iran says it is not engaged in any discussions with the United States (US) about reopening the Strait of Hormuz. Tehran, however, says it is in the final stages of talks with Oman over the collective management of navigation through the strategic waterway.

However, concerns about global demand could limit WTI's upside potential. The Organization of the Petroleum Exporting Countries (OPEC) lowers its forecast for global Oil demand growth this year to 580,000 barrels per day (bpd), from 780,000 previously, marking a fourth consecutive downward revision. The International Energy Agency (IEA) also trims its demand outlook, warning that prolonged conflicts and elevated prices are beginning to weigh on consumption.

WTI Oil therefore remains caught between opposing forces. Persistent supply risks in the Middle East support prices in the short term, while the deteriorating global demand outlook could limit a stronger recovery.

Oil volatility persists as Hormuz disruption drives inventories toward historic lows

Strategists at Rabobank note that since the end of June’s memorandum of understanding, “Brent crude has swung between roughly $72- 102/bbl, following every rumor of a peace deal or renewed escalation,” underscoring the sensitivity of Oil prices to headlines around the Hormuz crisis. They highlight that tanker “transits are still running at roughly 3 to 10 ships a day against 130-140 before the war and would need to recover to ~80 to stabilize energy markets,” even with current diversionary flows routed through Saudi Arabia’s East-West Pipeline to the Yanbu export terminal and the UAE’s Fujairah oil terminal. At the same time, Rabobank warns that “the ongoing stockpile drawdown has left global inventories heading toward historic lows, especially in refined products,” reinforcing their view that the market remains acutely exposed to further supply shocks.

WTI US Oil technical analysis

In the one-hour chart, WTI US Oil trades at $80.68, retaining a mildly bearish bias as it remains capped beneath the 100-hour simple moving average (SMA) at $81.18 and the downward resistance trend line now acting as overhead supply near $81.94. Price still holds above the 200-hour SMA at $78.75 and the horizontal floor at $80.00, suggesting a corrective pullback within a broader constructive structure, while the Relative Strength Index (RSI) around 46 leans slightly to the downside without signaling oversold conditions.

On the topside, immediate resistance is seen at the 100-hour SMA at $81.18, followed by the trend-line level near $81.94, with stronger barriers aligning at $83.57 and then $84.50. On the downside, initial support is located at the $80.00 horizontal line, ahead of the 200-hour SMA at $78.75, and a sustained break below these levels would likely open the way to a deeper bearish extension in the near term.

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