- WTI attracts some sellers on Monday, snapping a seven-day winning streak to a one-month high.
- Escalating Middle East tensions and the Hormuz standoff could help limit losses for the commodity.
- The bullish technical setup backs the case for the emergence of some dip-buying at lower levels.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – kicks off the new week on a weaker note, eroding a part of Friday’s strong gains to the $99.25-$99.30 region, or a one-month high. The commodity slides back below mid-$97.00s during the Asian session amid hope of improving supplies after US President Donald Trump signed an order waiving most sanctions and tariffs on Russia. However, escalating Middle East hostilities and conflicts in the Strait of Hormuz could limit deeper losses for the black liquid.
Three tankers were also damaged in the Strait of Hormuz over the weekend as Iran’s IRGC navy maintained that the waterway remained closed and vessels could pass only with its authorization. Moreover, a secretary of Iran’s Supreme National Security Council, Mohsen Rezaei, warned that Tehran has prepared a new retaliation plan for any renewed US-Israeli attack. Adding to this, Ukraine launched more than 1,000 drones at Russia on Sunday in one of the war’s largest aerial assaults, sparking fires at an oil export terminal and a storage depot in St. Petersburg.
Furthermore, clashes between Saudi Arabia and the Iran-backed Houthi rebel group in Yemen have shown little sign of abating. This keeps the geopolitical risk premium firmly in play and might continue to act as a tailwind for crude oil prices, making it prudent to wait for strong follow-through selling before confirming that the recent move up witnessed over the past three weeks or so has run out of steam.
From a technical perspective, crude oil prices maintain a constructive bullish bias above the 100-period simple moving average (SMA) on the 4-hour chart, and all referenced Fibonacci retracement levels. Meanwhile, the Relative Strength Index (RSI) is hovering in bullish territory around 63, while the Moving Average Convergence Divergence (MACD) stays marginally positive. Momentum indicators together suggest that upside pressure is intact even as short-term overbought conditions begin to moderate.
Meanwhile, any subsequent slide could find initial support at the 23.6% Fibo. retracement at $96.25, followed by a deeper cushion at the 38.2% level near $94.37 and the 50% retracement around $92.85. Furthermore, the 100-period SMA reinforces the broader demand zone above the 61.8% retracement at $91.33.
On the topside, the next notable resistance emerges at the Fibonacci swing high around $99.29, and a sustained break above that level would open the door for an extension of the current bullish phase, while a drop below $96.25 would signal a corrective pullback toward the mid-$90s.
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