WTI declines to near $89.00 despite US-Iran tensions
- WTI price drifts lower to near $89.10 in Wednesdayโs early European session.
- US crude inventories fell by 2.6 million barrels in the week ending August 28, API showed.
- Iran launched retaliation after US strikes on IRGC targets across Iran.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $89.10 during the early European trading hours on Wednesday. WTI declines as traders take some profits. However, the potential downside of black gold might be limited amid ongoing tensions in the Middle East.
Iranโs Islamic Revolutionary Guard Corps (IRGC) claimed it has launched a โheavyโ ballistic missile attack on Prince Hassan airbase and a US Marine base in Jordan in response to earlier US strikes that killed civilians.
The US military said that its forces completed a wave of strikes against Iranian targets on Tuesday after what it said were attempted attacks by Iran against commercial shipping and American service members. US President Donald Trump warned of more attacks to come if Tehran responded. Escalating tensions in the Middle East could raise fears of oil supply disruption and boost the WTI price.
US crude oil inventories dropped more than expected last week. According to the American Petroleum Institute (API), crude oil stockpiles in the US for the week ending August 28 fell by 2.6 million barrels, compared to a rise of 4.2 million barrels in the previous week. The market consensus was for a decline of 800,000 barrels.
Traders await the release of the US Energy Information Administration (EIA), which is due later on Wednesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might undermine the WTI price.
Energy risk premia build as USโIran tensions expose fragile Gulf security
According to TD Securities, the latest flare-up between the US and Iran underscores just how precarious the geopolitical backdrop remains for energy markets. Strategists at the bank stress that the โlatest escalation in the conflict between the US and Iran continues to highlight how flimsy any deal or MoU headlines really are,โ reinforcing the sense that headline-driven truces offer little durable assurance for flows through key chokepoints such as the Strait of Hormuz.
Technical Analysis: WTI maintains a constructive bullish bias in the near term
In the daily chart, WTI US Oil sits comfortably above the 100-day moving average (MA) and the Bollinger middle band, suggesting a constructive bullish bias while the uptrend remains supported by these underlying levels. The Relative Strength Index (14) around 62 points to firm but not yet extreme upside momentum as price edges closer to the upper Bollinger band.
On the topside, immediate resistance is aligned with the upper Bollinger band near $89.55; a daily close above this cap would open the way for further gains. On the downside, initial support is seen at the 100-day MA around $85.10, ahead of the Bollinger midline near $83.15, with the lower band down at $76.70 acting as a more distant safety net should a deeper correction unfold.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
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 โlightโ and โsweetโ 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 โThe Pipeline Crossroads of the Worldโ. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
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.
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. APIโs report is published every Tuesday and EIAโs 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.
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.
