WTI Price Forecast: Likely revisit 50-day high above $92 on renewed US-Iran attacks
- The oil price rebounds strongly to near $81.00 after snapping a three-day losing streak.
- The US CENTCOM and Saudi Arabia jointly attacked Iran-aligned forces in Iraq.
- Investors expect the Fed to leave interest rates unchanged.
West Texas Intermediate (WTI), futures on NYMEX, trade 3.2% higher at around $81.00 during the early European trading session on Wednesday. The oil price bounces back strongly as joint attacks by the United States (US) Central Command (CENTCOM) and Saudi Arabia on Iran-backed military groups in Iraq have renewed fears of a prolonged global energy supply disruption.
Late Tuesday, the Saudi Ministry of Defence reported that it carried out targeted strikes against Iran-aligned armed groups in Iraq, in coordination with US CENTCOM, Al Jazeera reported. CENTCOM revealed that these attacks were in retaliation for planned attacks on US forces and Saudi oil facilities in the Eastern Province and Riyadh regions.
Meanwhile, subdued traffic near the Strait of Hormuz, a vital passage to almost 20% of global energy supply, indicates that the global energy supply will remain squeezed. Oil tankers fear using the Hormuz route as Iranian forces are attacking them as they pass through.
Earlier, the Iranian Islamic Revolutionary Guard Corps (IRGC) said that three oil tankers were 'struck and stopped' after ignoring warnings in the Hormuz.
Later in the day, investors will focus on the Federal Reserve’s (Fed) monetary policy decision. According to the CME FedWatch tool, traders see a 69.5% chance that the Fed will leave interest rates unchanged in the range of 3.50%-3.75%.
WTI technical analysis
WTI US Oil trades higher at around $80.93. The oil price strives to return above the 20-day Exponential Moving Average (EMA), which is at around $80.37.
The 14-day Relative Strength Index (RSI) near 51 points to neutral-to-positive momentum, hinting that the latest rebound could extend while price stays anchored above the short-term EMA.
On the downside, immediate support is defined by the July 28 low at $77.16, followed by the July 13 low at $72.53. Looking up, the odds of the oil price revisiting the 50-day high at $92.25 would strengthen once it extends its recovery above the July 27 high at $84.58.
(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 “light” and “sweet” 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 “The Pipeline Crossroads of the World”. 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. API’s report is published every Tuesday and EIA’s 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.