WTI Price Forecast: Slips below $79.00; bullish bias persists amid US-Iran tensions
- WTI retreats slightly from an over one-month top, though the downside potential seems limited.
- Escalating US-Iran tensions and the closure of the Strait of Hormuz should support the commodity.
- The technical setup backs the case for the emergence of dip-buying and warrants caution for bears.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – ticks lower during the Asian session on Thursday, though it lacks bearish conviction and remains close to an over one-month high touched earlier this week. The commodity currently trades just below the $79.00 mark, down over 1% for the day, as bulls opt to wait for further developments surrounding the Middle East crisis before placing fresh bets.
The US-Iran conflict has intensified since the beginning of this week, with US forces launching a fresh wave of airstrikes on Iran targeting missile and drone infrastructure. Tehran has responded with retaliatory drone and missile attacks on US-linked military facilities across the region. Adding to this, the US naval blockade of Iranian ports and the closure of the Strait of Hormuz might continue to act as a tailwind for crude oil prices. This, in turn, suggests that any meaningful corrective pullback is more likely to be bought into.
From a technical perspective, this week's breakout through the 23.6% Fibonacci retracement level of the April-July fall and the 200-day Exponential Moving Average (EMA) were seen as key triggers for bullish traders. Moreover, the Relative Strength Index (14) at 54.36 has shifted into moderately positive territory, while the Moving Average Convergence Divergence (MACD) is positive at 1.85. Momentum indicators together suggest that bullish momentum is rebuilding after the recent recovery from the $67.07 cycle low.
In the meantime, immediate support is seen at the 200-day EMA at $77.28, followed by the 23.6% retracement at $76.59, while a deeper pullback towards the $67.07 anchor would threaten the current bullish bias. On the topside, initial resistance is located at the 38.2% Fibo. level at $82.47, ahead of a more substantial barrier at the 50.0% retracement near $87.23. A daily close above these levels would expose the 61.8% retracement at $91.98, with subsequent upside targets at $98.75 and $107.38.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI daily chart
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.
