WTI holds firm as Strait of Hormuz concerns outweigh sharp US inventory build
- WTI Oil holds firm as traders look past a sharp rise in US crude inventories.
- The closure of the Strait of Hormuz keeps a geopolitical risk premium in Oil prices.
- The EIA raises its 2026 average WTI price forecast to $80.88 per barrel.
West Texas Intermediate (WTI) Oil trades in a narrow range on Wednesday as traders weigh a sharp rise in US crude inventories against persistent supply risks in the Middle East. At the time of writing, WTI trades around $82.20 per barrel, hovering near a one-and-a-half-week high.
Data from the US Energy Information Administration (EIA) showed that crude inventories rose by 17.422 million barrels in the week ending August 7, far above the previous week’s increase of 2.479 million barrels. Markets had expected stocks to fall by 1.4 million barrels. This was the largest weekly increase since January 2023.
However, traders shrugged off the large inventory build as market sentiment remains driven by developments surrounding the Strait of Hormuz. US President Donald Trump said that Washington has “total control” over the waterway, adding, “I think we will keep it.”
Trump’s comments came after US forces disabled a Panama-flagged cargo ship on Tuesday after it ignored repeated warnings and attempted to break the US naval blockade.
The continued closure of the Strait prompted the International Energy Agency (IEA) to lower its global Oil supply and demand forecasts. The agency now expects supply to fall by 4.3 million barrels per day (bpd) in 2026 to around 102 million bpd.
World Oil demand is forecast to decline by 1.6 million bpd, a 510,000 bpd larger contraction than estimated in the previous report. In a separate report, the EIA raised its forecast for the average WTI price in 2026 to $80.88 per barrel from $76.26 previously.
Technical analysis
The near-term bias is mildly bullish as WTI holds above both the 50-day and 200-day Simple Moving Averages (SMAs). The Relative Strength Index (RSI) on the daily chart stands near 53, pointing to neutral-to-positive momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator is flattening near the zero line, suggesting consolidation rather than a strong directional move.
On the upside, the 100-day SMA near $86 acts as the first major resistance. A decisive break above this level could open the door toward the $90 psychological mark, followed by $100.
On the downside, immediate support is seen at the $80 psychological mark, followed by the 50-day SMA at $78. A deeper pullback would expose the 200-day SMA at $75.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
What is WTI Oil?
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.
What factors drive the price of WTI Oil?
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.
How does inventory data impact the price of WTI Oil
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.
How does OPEC influence the price of WTI Oil?
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.