WTI Price Forecast: Sticks to losses below $89.00; bearish setup backs further weakness
- WTI attracts some follow-through sellers on Tuesday in reaction to the Israel-Iran truce.
- The US-Iran peace deal uncertainty keeps geopolitical risks in play and helps limit losses.
- The technical setup favors bears and backs the case for further near-term depreciation.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – extends the previous day's sharp retracement slide from the vicinity of mid-$93.00s and attracts some follow-through selling during the Asian session on Tuesday. The commodity trades around the $88.75 region, down over 1% for the day, though it lacks bearish conviction as traders await further progress in the broader Middle East conflict.
Iran and Israel said on Monday they had halted attacks on each other after an appeal from US President Donald Trump, easing geopolitical tensions and exerting pressure on Crude Oil prices. However, Iran warned it would resume hostilities if ? Israel continued to hit Hezbollah in Lebanon. Adding to this, the US-Iran standoff over Tehran's nuclear program and the Strait of Hormuz keep geopolitical risk premiums in play, helping limit losses for the black liquid.
The commodity retains a bearish near-term bias below the 200-period Simple Moving Average (SMA) on the 4-hour chart, which acts as the primary topside cap. Furthermore, the Moving Average Convergence Divergence (MACD) indicator remains below the zero line, and a broadly negative profile hints that downside momentum persists. Adding to this, the Relative Strength Index (RSI) around 42 suggests subdued demand rather than oversold conditions.
The aforementioned technical setup keeps the door open for further weakness if selling resumes. Meanwhile, the immediate downside focus stays on a strong horizontal support between $86.50 and $86.00. A convincing break below would leave Crude Oil prices vulnerable to renewed selling toward sub-$81.00 levels, or the April monthly swing low.
On the topside, initial resistance is defined by the 200-period SMA at $95.25, and bulls would need a sustained recovery above this barrier to ease the prevailing bearish structure on the four-hour chart. Nevertheless, momentum indicators currently argue that rallies are more likely to face selling pressure beneath the medium-term average.
(The technical analysis of this story was written with the help of an AI tool.)
WTI 4-hour 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.
