West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $84.75 during the early European trading hours on Thursday. WTI falls amid hopes for progress in peace talks over the Middle East and Russia-Ukraine, and growing US inventories.
Reuters reported that Russian and Ukrainian negotiators reached an agreement on a major prisoner exchange following two days of peace talks in Abu Dhabi, which concluded on Wednesday. However, US mediators noted that significant disagreements persist over key issues, particularly territorial matters. Ukrainian President Volodymyr Zelensky expressed hope to achieve concrete results in resolving the war this year.
"Markets are falling on expectations that behind-the-scenes efforts are underway to secure a ceasefire between Russia and Ukraine and that it is unlikely the Iran war will escalate ahead of the US-China summit next week," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities.
"However, given the uncertainty surrounding the Strait of Hormuz, the markets are unlikely to suffer a significant collapse," Kikukawa added.
US crude oil inventories showed a sharp build last week, feeding worries about oversupply. According to the Energy Information Administration (EIA), crude stockpiles climbed by 9 million barrels in the week ending November 5, compared to a fall of 5.267 barrels in the previous week. The market consensus was for a decline of 1 million barrels.
Oil volatility persists as US-Iran diplomacy remains uncertain
Analysts at Commerzbank note that oil markets "remain volatile as investors assess whether the Democrats' control of Congress could accelerate diplomatic efforts to end the US-Iran conflict." They add that "reports that Iran is reviewing proposals concerning its nuclear programme offered some encouragement, although no comprehensive agreement has been announced and risks to Gulf shipping remain." Against this backdrop, Commerzbank highlights that "Brent crude oil prices rose 5% to USD99.33."
Technical Analysis: WTI retains a negative tone under the 100-day SMA
In the daily chart, WTI US Oil extends a corrective phase below its key moving average structure and the Bollinger Bands’ middle line, which keeps the near-term bias bearish. Price is capped by the 100-day simple moving average (SMA), while the Bollinger Bands’ lower band offers initial downside protection; meanwhile, the Relative Strength Index (14) around 34 hovers in oversold territory, hinting at weakening downside momentum but not yet signaling a bullish reversal.
On the topside, immediate resistance is seen at the 100-day SMA at $86.80, ahead of the Bollinger Bands’ middle band near $94.95, with the upper band up at $107.45 marking a more distant barrier if a stronger rebound unfolds. On the downside, first support aligns with the Bollinger Bands’ lower band around $82.45, and a clear break beneath this level would reinforce the bearish tone and open the door to deeper losses in the coming sessions.
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