WTI oil price forecast: Consolidates near $94 amid ongoing global tensions

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WTI crude oil outlook

Highlights

The price is trying to test the support zone at $93 to $94.
The relative strength index is trading within the high-30 to mid-40.
The resistance is building up at the $95.60 to $96 price points. The price has significant support at $91.

WTI crude oil futures are currently around $95.60, which is the average over the past 20 days, just below the current range in which the price of oil is trading today. If the price is hovering just a little above this level at $96.02, then the price is touching the 50-day average level. These are acting as ceilings at which the price is finding it hard to break through. Resistance is also developing at these levels where these lines are located.

A figure of $94.97 shows where the 100-period EMA stands right now. Sitting beneath it, the 200-period EMA rests at $91.16. Even with downward pressure visible, strength appears to hold ground further down.

WTI crude oil price dynamics (Source: TradingView)

As crude oil rallied quite impressively to the $115 mark, the asset experienced a strong rejection, resulting in the formation of a sharp decline. As a result, the asset fell to the $90 mark before it started to trade in a narrower trading range.

From the recent trading sessions, it is evident that the asset is trading in a narrower trading range, indicating that the asset has entered the consolidation phase after the expansion phase.

Supply balance and demand expectations continue to shape the crude oil outlook

WTI crude oil prices are still being influenced by the changing supply estimates and inventory levels. The latest data indicating rising U.S. crude oil inventories is also having some impact on the prices, suggesting that the near-term supply may not be as tight as initially anticipated. Geopolitics is also back in the picture with the latest attacks on energy infrastructure in the UAE and the risks of shipping disruptions near the Strait of Hormuz. This is creating a contradictory situation where the physical supply indicators are tempering the upward momentum, but the geopolitical tensions are preventing the oil price from falling sharply.

There are also some external factors that affect the oil price, such as geopolitical events. Unless there is some disruption in the supply routes or the demand scenario improves significantly, the oil price is likely to remain within its range in the near future.

The technical structure reflects consolidation after earlier expansion

If the price of WTI crude oil is able to sustain at an amount higher than $93 and $94, it may have the potential to move towards the price range of $95.60 and $96.08. This is because it is essential that the price breaks this particular level in order to move higher.

On the flip side, if prices drop past $91, then it could weaken the structure, potentially leading to further declines if selling pressure picks up pace.

In our previous analysis, it was seen that the upward rally towards $115 was a significant expansion phase that altered the entire structure. From the current price action, the market seems to be moving towards stabilization from the previous volatility.

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