WTI slumps below $99.00 on profit-taking, US-Iran tensions in focus
- WTI price falls to near $98.50 in Friday’s early European session.
- Traders book some profits, while EIA showed US crude inventories fell less than expected last week, weighing on WTI.
- IRGC attacked a US unmanned vessel in the Strait of Hormuz.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $98.50 during the early European trading hours on Friday. WTI tumbles as traders take some profits amid technical oversold conditions and US crude inventories fall less than expected.
WTI price has risen over 10.25% for the week, the highest since May. However, the black gold faces some selling pressure in the day as markets turn cautious ahead of the key US inflation data. Additionally, technical indicators signaled overbought conditions, hinting that a temporary sell-off cannot be ruled out in the near term.
US crude oil inventories see a modest weekly draw. According to the Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending September 4 declined 391,000 barrels, compared to a fall of 4.45 million barrels in the previous week. The market consensus was for a decrease of 1.6 million barrels.
US President Donald Trump said on Thursday that he was not looking for a deal with Iran. Trump added that he did not expect oil prices to fall until “right after” the November midterm elections, despite having said for months that the war would be over quickly.
Increasing attacks along key shipping routes in the Middle East fuel fears of a prolonged disruption to supplies. This, in turn, might boost the WTI price. Reuters reported that Iran’s Islamic Revolutionary Guard Corps (IRGC) said its navy struck a US “Saildrone-type” unmanned vessel in the Strait of Hormuz, “thwarting its aggressive mission.”
Additionally, Yemen’s Houthis seized the crucial Red Sea city of Mocha, expanding control over the strategic Bab al-Mandeb strait, one of the world’s most important trade routes.
Oil continues to grind higher as conflict risk keeps market tight
According to commodity strategists at TD Securities, crude continues to rally amid persistent geopolitical tensions, with “crude rallies with seemingly no end to conflict in sight.” They argue that “another round of escalation and an apparent preference for limited attacks and economic squeeze as opposed to deal-making leaves the energy market on a continued tightening trajectory,” reinforcing the view that ongoing conflict dynamics are constraining supply and keeping the balance of risks tilted toward higher prices.
Technical Analysis: WTI maintains a constructive outlook amid overbought conditions
In the daily chart, WTI US Oil holds a firm bullish bias, trading well above the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-day middle line, which together suggest a solidly supported uptrend. Price is testing the upper Bollinger Band, while the Relative Strength Index (14) at 70.53 signals overbought conditions, hinting that upside momentum is strong but becoming stretched.
On the topside, immediate resistance sits at the upper boundary Bollinger band around $98.30, where a sustained daily close higher would open the way for further gains. On the downside, initial support is seen at the Bollinger 20-day middle band near $87.80, ahead of the 100-day SMA at $85.35, with the lower limit Bollinger band around $77.30 acting as a deeper cushion if a sharper correction unfolds.
(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.