WTI falls below $91.50 amid hope for US-Iran diplomatic progress
- WTI price slumps to near $91.40 in Thursday’s early European session.
- Iranian official said Tehran reviews US response to peace proposals.
- Crude oil inventories rose by 2.969 million barrels in the week ended September 18, EIA said.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $91.40 during the early Asian trading hours on Thursday. WTI tumbles amid hopes for diplomatic progress between the US and Iran.
Reuters reported on Wednesday that Iran said it remained open to diplomacy to end the US-Iran conflicts, though the two countries remain far apart on ways to do so. The official said Tehran was reviewing Washington's response to its peace proposals, which prioritise lifting a US naval blockade on Iranian ports and reopening the Strait of Hormuz.
“Oil is falling because the market is unwinding part of its geopolitical risk premium as Gulf supply recovers and hopes of a US-Iran diplomatic breakthrough grow,” said Priyanka Sachdeva, head of market insights at Phillip Nova Pte Ltd. “But the physical market is nowhere near fully normalized, so the downside is still highly headline-sensitive,” Priyanka added.
US crude oil inventories see a surprising weekly build, which contributes to the WTI’s downside. According to the Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending September 18 climbed by 2.969 million barrels, compared to a decline of 640,000 million barrels in the previous week. The market consensus was for a fall of 700,000 barrels.
Energy market seen as double-edged sword amid shifting Strait dynamics
According to TD Securities, the current configuration of the energy complex remains finely balanced, with risks running in both directions. Strategists there “continue to see the current state of the energy market as a double-edged sword, as either increased refiner runs ease product market tightness but re-tighten crude, or the crude rally succumbs to increased flows without increased refiner uptake, leaving product markets to continue higher until demand destruction is found.” At the same time, TD Securities highlights that “the elevated flows through the Strait point to a loss of Iranian leverage, which suggests they could be more open to making a deal than previously, but it also increases the probability of escalation in an attempt to reassert control,” underscoring the complex geopolitical backdrop for crude and refined products alike.
Technical Analysis: WTI
In the daily chart, WTI US Oil holds a constructive near-term bullish bias as price remains above both the 100-day moving average (MA) and the lower Bollinger Band, keeping the broader uptrend intact despite the recent pullback from triple-digit highs. The Relative Strength Index (14) near 51 suggests neutral momentum after overbought readings seen earlier in the rally, hinting at consolidation rather than a decisive reversal.
On the topside, initial resistance is located at the Bollinger middle band, the 20-day simple moving average (SMA), around $92.65, with the upper Bollinger Band near $101.95 acting as a more distant barrier if bullish pressure resumes. On the downside, immediate support is seen at the 100-day MA at $84.95, followed by a secondary cushion at the lower Bollinger Band near $83.35, where a break would signal a deeper corrective phase within the broader trend.
(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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