WTI Price Forecast: Renewed Mid-East uncertainty supports oil prices; 20-day EMA still a barrier
- The oil price jumps to near $91.20 amid renewed concerns over Middle East peace.
- US forces launched strikes on Iranian boats and missile-launching sites, which they described as self-defense.
- US Secretary of State Rubio said the Hormuz closure is unlawful and not acceptable to the world.
West Texas Intermediate (WTI), futures on NYMEX, is up 1.8% to near $91.20 during the early European trading session on Tuesday. The oil price holds early gains driven by renewed uncertainty in the Middle East, following United States (US) attacks on Iranian missile launching sites and Iranian boats deploying mines.
However, the impact of the renewed Mideast uncertainty appears to be limited, as the US Central Command has clarified that attacks were in “self-defense” and not meant to break the ceasefire. While there have been no comments from Iran regarding the same.
Also, US President Donald Trump continued to express confidence that negotiations with Iran are “progressing well”, Bloomberg reported.
During the Asian trade, US Secretary of State Marco Rubio stated that the Strait of Hormuz, a critical passage to almost 20% of global energy supply, has to be open “one way or the other”, adding that the passage closure is “unlawful, unacceptable, unacceptable and unsustainable” for the world.
WTI technical analysis
WTI US Oil trades higher at around $91.00 as of writing. However, the near-term bias of the contract is bearish as it stays below the 20-day Exponential Moving Average (EMA), which is at $96.15.
The 14-day Relative Strength Index (RSI) falls to mid-40s, which only hints at easing downside pressure rather than a clear reversal.
On the topside, the 20-day EMA at $96.15 is the first meaningful resistance, and a daily close above this dynamic barrier would be needed for a more sustained recovery towards $100. Looking down, the oil price could extend its decline towards $80.00 if it fails to hold the May 6 low at $86.92.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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