WTI remains under pressure as easing geopolitical risk outweighs tighter inventories
WTI is holding near $70 per barrel after a sharp multi-week selloff as traders continue to unwind the geopolitical premium that drove prices higher earlier this quarter. Market sentiment has improved on expectations that diplomatic efforts involving Iran will help reduce supply disruption risks, while shipping activity through the Strait of Hormuz has become more stable.
At the same time, investors are increasingly focused on slowing global demand growth rather than supply shortages.
Falling US crude inventories provide only limited support
The latest EIA data remains fundamentally supportive, with US commercial crude inventories falling by 6.1 million barrels to 412.1 million barrels, marking the ninth consecutive weekly decline. Stocks are now about 7% below the five-year seasonal average, highlighting a relatively tight physical market. However, rising gasoline and distillate inventories, together with softer fuel demand, have limited the bullish impact of lower crude stockpiles.
Technical trend remains bearish
The 4-hour chart continues to reflect a clear downtrend. WTI remains below all major moving averages, while each recovery attempt has attracted fresh selling pressure. Price is now consolidating around the $69-70 area after reaching fresh local lows, suggesting that sellers still control the broader trend. Initial resistance is located near $72-73, while a sustained break above that zone would be needed to improve the short-term technical outlook. Until then, rebounds are likely to be viewed as corrective rather than the beginning of a new bullish trend.
Markets await fresh catalysts
Attention now shifts to the next EIA inventory report, upcoming OPEC+ signals, and US macroeconomic data that could influence expectations for global oil demand. While tighter crude inventories continue to provide some support, concerns about weaker consumption, easing geopolitical tensions, and expectations of gradually improving Middle East supply continue to cap upside potential. Unless a new supply disruption emerges, WTI is likely to remain under pressure in the near term, as I wrote in the article WTI holds support after decline.
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