WTI crude has pulled back after a strong advance, but prices continue to trade at elevated levels as geopolitical risks remain the dominant market driver. Fresh attacks on Saudi oil tankers in the Red Sea and renewed concerns over shipping through the Bab el Mandeb and Strait of Hormuz have reinforced fears of supply disruptions.
The market continues to price in a substantial geopolitical premium as investors monitor the possibility of further escalation involving Iran and the United States.
At the same time, OPEC+ continues its gradual production normalization strategy while stressing that future output adjustments remain flexible and can be reversed if market conditions deteriorate. Although additional barrels are scheduled to reach the market, traders currently view geopolitical risks as outweighing the impact of modest production increases.
Inventories and macro outlook remain closely watched
The latest U.S. Energy Information Administration data showed commercial crude oil inventories increased by 2.0 million barrels to 411.7 million barrels. Even after the build, inventories remain around 6% below the five-year seasonal average, indicating that physical supply is still relatively tight.
Meanwhile, investors continue to assess the outlook for U.S. monetary policy. Expectations that the Federal Reserve could gradually move toward a less restrictive stance later this year remain supportive for the broader economic outlook and fuel demand. However, persistent inflation risks resulting from higher energy prices could delay policy easing, keeping volatility elevated across commodity markets.
Technical picture suggests consolidation after strong advance
The chart shows that WTI has entered a corrective phase after failing to extend its recent rally above the $93-94 area. Despite the latest decline, prices continue to trade above the medium and long-term moving averages, suggesting that the broader recovery trend remains intact. At the same time, the loss of short-term momentum increases the probability of a period of consolidation before the next directional move.
Initial support is located around $90.00, followed by $88.00-87.50, where buyers could become more active. A break below these levels would expose $85.00 and potentially trigger a deeper correction. On the upside, as written in WTI extends advance as Middle East supply risks outweigh demand concerns, a sustained recovery above $93.00-94.00 would strengthen bullish momentum and reopen the path toward the psychological $95.00 level, although profit taking could emerge after the recent rally.
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