- WTI extends the previous day’s recovery move from its lowest level since late August.
- Bulls seem hesitant amid the optimism over diplomatic efforts to end the US-Iran war.
- The technical setup also warrants caution before positioning for any meaningful gains.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts some buyers on Wednesday, looking to extend the previous day’s goodish rebound from the $83.00 neighborhood, or its lowest level since late August. The commodity sticks to a mildly positive tone around the $85.70 region through the early European session, though it lacks bullish conviction amid hopes for a US-Iran peace deal.
The geopolitical risk premium remains in play amid the US-Iran standoff over the Strait of Hormuz and continuing tanker attacks in the strategic waterway. Adding to this, Houthi attacks on Saudi oil infrastructure further cloud the security situation in the Middle East. Moreover, a larger-than-expected draw in US crude oil inventories provides some support to the black liquid.
Meanwhile, US Secretary of State Marco Rubio said on Tuesday that there is no need for major combat operations against Iran. This comes as US President Donald Trump told reporters that there is positive momentum behind negotiations to end the Middle East war. This fuels optimism over a potential diplomatic breakthrough to end the conflict and keeps a lid on crude oil prices.
From a technical perspective, the commodity holds under the 200-day Simple Moving Average (SMA) at $86.42 and below the 38.2% Fibonacci retracement at $89.97 of the $67.08–$104.12 recovery, keeping a bearish near-term tone. Moreover, the Relative Strength Index (14) hovers near 35, and the Moving Average Convergence Divergence (MACD) histogram remains negative and depressed.
Momentum indicators together suggest persistent downside pressure even as conditions drift toward oversold territory. Hence, any subsequent move beyond the 200-day SMA at $86.42 might confront immediate resistance near the 38.2% retracement at $89.97. A daily close above this region would be needed to ease the current bearish bias and open the way toward $95.38 and $104.12.
On the downside, initial support is located at the 50.0% retracement at $85.60, with a break exposing the 61.8% Fibo. level at $81.23, and then the deeper retracement supports at $75.01 and $67.08.
