• WTI regains positive traction following the previous day’s volatile two-way price swings.
• The Mideast uncertainty keeps the geopolitical risk premium in play and lends support.
• The technical setup warrants caution before placing fresh bullish bets on the commodity.

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts fresh buyers during the Asian session on Wednesday, though it struggles to capitalize on the momentum beyond the $99.00 mark. The commodity remains below the highest level since September 16, touched the previous day, as traders await further developments surrounding the Middle East crisis.

Bloomberg reported on Tuesday that a diplomat involved in US-Iran negotiations disputed news suggesting that a deal was close. Moreover, Iranian Parliament Speaker Mohammad Bagher Ghalibaf told Pakistan’s Army Chief, Asim Munir, that the US could not earn Iran’s trust without implementing previously declared conditions, including the cessation of all hostilities and the unfreezing of the country’s assets. This, in turn, keeps the geopolitical risk premium in play and supports crude oil prices.

Adding to this, Iran’s First Vice President said the country had no choice but to exercise sovereignty over the Strait of Hormuz, exacerbating worries over crude supply disruptions and helping the black liquid to build on the overnight bounce from the weekly low. The upside, however, remains capped on the back of an unconfirmed report on Tuesday that Qatar and Pakistan had offered a middle-ground plan to the US and Iran that met the demands of both sides. This, in turn, warrants caution for bullish traders.

The commodity retains a bullish near-term bias as it holds above the 100-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, the overnight bounce validated a strong support near the $95.00 resistance breakpoint, underpinning the broader uptrend. However, momentum indicators have cooled, with the Moving Average Convergence Divergence (MACD) slipping further below the zero line and its signal line, while the Relative Strength Index (RSI) at 59.76 has eased out of prior overbought territory.

The aforementioned technical setup hints at a consolidative phase rather than a decisive reversal, suggesting that any meaningful decline might continue to find decent support near the $95.00 psychological mark. Furthermore, the structural support is located at the 100-period SMA, around $92.26, where buyers would be expected to reassert control on a deeper pullback within the prevailing bullish context.

Meanwhile, the topside remains open, and any renewed bullish momentum could see oil prices extending gains to the $100.00 psychological mark en route to the overnight swing high, around the 101.00 round figure. The latter could act as a pivotal resistance level, which, if cleared, will be seen as a fresh trigger for bullish traders and set the stage for an extension of the uptrend witnessed over the past two weeks or so.

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

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.

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.