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 conflict, 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 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.
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