- WTI meets with a fresh supply amid easing supply concerns, though the downside seems cushioned.
- The US-Iran standoff keeps the geopolitical risk premium in play and should support the commodity.
- A convincing break below the 50% Fibo. support is needed to back the case for further depreciation.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – comes under some renewed selling pressure during the Asian session on Thursday, reversing the previous day’s modest recovery gains. The commodity, however, holds above the $88.00 mark and a nearly four-week low as traders await further developments surrounding the Middle East crisis.
Recovery in flows through the Saudi East-West pipeline is seen as a key factor weighing on crude oil prices. However, the US-Iran standoff keeps the geopolitical risk premium in play, which should help limit the downside for the commodity. In fact, hopes for a diplomatic solution to end the US-Iran war faded after President Donald Trump turned down a seven-day peace proposal from Iran. Moreover, Trump has told aides that he expects major combat operations and renewed bombing against Iran to resume following the November midterm elections.
From a technical perspective, the overnight failure to find acceptance above the 200-period Simple Moving Average (SMA) on the 4-hour chart and the subsequent slide favor bearish traders. Moreover, the Moving Average Convergence Divergence (MACD) remains below zero with a slightly negative reading, and the Relative Strength Index (RSI) around 38 suggests lingering downside pressure rather than a decisive oversold reversal. Crude oil prices, however, hold above the 50.0% Fibonacci retracement at $87.75, which should act as a nearby pivot.
A sustained break lower would expose deeper structural supports at the 61.8% retracement at $84.37 and then the 78.6% level at $79.56, ahead of the cycle floor near $73.44. On the topside, initial resistance is seen at the 200-period SMA at $90.11, followed by the 38.2% Fibo. retracement at $91.13, which capped the overnight recovery attempt. Meanwhile, a more substantial bullish reprieve would require a move through the 23.6% retracement at $95.31.
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