WTI is recovering on August 27 after the sharp decline of the previous sessions and is currently trading around $83.2 per barrel. After falling from the $88 area, prices dropped to around $80.4-80.5, but buyers actively bought the dip and pushed the price back above $83.
The main factor remains the situation around the Strait of Hormuz: talks between Iran and Oman on a temporary corridor and a gradual restoration of shipping are reducing the geopolitical premium, although no full agreement has been reached yet. Therefore, the market has already partially priced in the prospect of supply normalization, but ongoing risks in the Middle East continue to limit downside pressure on oil.
EIA data help stabilize sentiment
The latest EIA report was significantly less bearish than the preliminary API data. Commercial crude oil inventories for the week ended August 21 increased by only 95,000 barrels to 428.9 million, compared with expectations for a build of around 0.5 million. At the same time, gasoline inventories fell by 2.5 million barrels, distillate stocks declined by 2.2 million, and the latter remain around 14% below the five-year average.
Refinery utilization rose to 97.4%, gasoline consumption approached 9 million bpd, while crude production remained near a record 13.82 million bpd. Thus, an almost neutral crude inventory figure and declining product stocks helped stabilize WTI after the recent selloff.
Global balance still looks relatively tight
In the medium term, the market remains significantly tighter than the recent price decline might suggest. The IEA expects global demand to fall by 1.6 million bpd in 2026, but at the same time forecasts a 4.3 million bpd decline in supply. In July, observed global inventories fell by another 69 million barrels, while the cumulative decline since the start of the conflict reached around 410 million barrels. The IEA estimates the market deficit in the third quarter at around 1.8 million bpd, so even a gradual restoration of flows through Hormuz does not yet imply a rapid shift of the global market into surplus.
$83.5 remains key short-term trigger
From a technical perspective, the recovery above $82-82.5 has somewhat improved the near-term outlook, but as long as the price remains below $84, the risks of renewed decline will stay high. A breakout above resistance around $83.5 would increase the chances of moving through it and rising toward $85; otherwise, as written in the article WTI extends correction as Hormuz supply risks ease, support at $82.5 could be broken and bears may test $82-81.5.
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