• WTI drifts lower on Thursday amid fresh optimism over the reopening of the Strait of Hormuz.
• However, the geopolitical risk premium remains in play, limiting the downside for the commodity.
• The technical setup favors bearish traders and backs the case for a further depreciating move.

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts some selling following the overnight bounce from the $79.30-$79.25 region, or an over two-week low, though the downside remains cushioned. The commodity trades just above the $81.00 mark during the first half of the European session on Thursday, down less than 0.50% for the day.

The optimism over a potential US-Iran peace deal and the reopening of the Strait of Hormuz turns out to be a key factor exerting some pressure on crude oil prices. However, Iran’s Deputy Foreign Minister Kazem Gharibabadi warned on Tuesday that the strategic waterway will not fully reopen until the US fulfils its commitments under an interim peace deal signed in June. This keeps the geopolitical risk premium in play and acts as a tailwind for the black liquid.

The overnight bounce struggled to find acceptance above the $82.10-$82.15 confluence – comprising the 100-period Exponential Moving Average (EMA) on the 4-hour chart and the 38.2% Fibonacci retracement level of the recovery from the monthly low. Moreover, the Moving Average Convergence Divergence (MACD) remains marginally negative with the line under its signal and both below zero, while the Relative Strength Index (RSI) around 40 suggests subdued momentum.

The broader technical setup, in turn, hints that rallies could stay capped beneath the clustered resistance overhead despite the recent recovery from oversold territory. On the downside, initial support aligns with the 50.0% retracement at $80.47, followed by the 61.8% level at $78.83 if selling pressure resumes. Bulls, on the other hand, need to wait for sustained strength above the $82.10-$82.15 confluence resistance before placing fresh bets and positioning for any further gains.

The next relevant hurdle is seen at the 23.6% retracement at $84.13 and the structural anchor near $87.40, levels that would need to be cleared to negate the current bearish tone.

WTI 4-hour chart