WTI holds near three-week low as traders await Hormuz agreement
- WTI stays near a three-week low as traders await confirmation that shipping through the Strait of Hormuz will resume.
- EIA data show an unexpected build in US crude inventories.
- The technical outlook stays bearish below the major daily moving averages, with the $67.00-$70.00 zone offering support.
West Texas Intermediate (WTI) Crude Oil remains under pressure on Wednesday but struggles to attract fresh selling as traders await confirmation that commercial shipping through the Strait of Hormuz will resume. At the time of writing, WTI trades around $74 per barrel, hovering near three-week lows.
Iran and Oman have reached an understanding on the geographic coordinates of a proposed shipping route through the waterway. Iran’s Foreign Ministry said a joint statement is in the final stages of review and drafting, provided “third parties” do not interfere.
However, an informed source told Fars News that an agreement between Iran and Oman would not automatically reopen the Strait. Separate arrangements would still be required, including the fulfilment of US commitments.
Until a final agreement is reached and shipping resumes, a geopolitical risk premium is likely to remain embedded in Oil prices, limiting the scope for a deeper decline.
Meanwhile, data from the US Energy Information Administration (EIA) showed that Crude Oil inventories unexpectedly rose by 2.479 million barrels, compared with expectations for a 1.5 million-barrel decline. Stocks had fallen by 7.167 million barrels in the previous week.
Technical analysis
On the daily chart, the near-term bias remains bearish as the price holds well below the 21-day, 50-day and 100-day Simple Moving Averages (SMAs).
Momentum indicators reinforce the corrective tone, with the Relative Strength Index (RSI) lingering below the neutral 50 mark around 42 and Moving Average Convergence Divergence (MACD) staying below the zero line with a negative reading, hinting that sellers still retain control.
On the topside, initial resistance is seen at the 50-day SMA near $79.58, followed closely by the 21-day SMA at $80.27, forming a nearby supply zone that could cap any extension of the recovery, with the 100-day SMA higher up at $87.43 acting as a more distant barrier.
On the downside, the $67.00-$70.00 zone offers immediate support. A decisive break below this area could open the door to a deeper decline.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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