WTI crude oil price nears resistance as Red Sea tensions and U.S. supply shift sentiment
WTI crude oil price tests $70.90 resistance as buyers push amid geopolitical risk
Oil prices edged higher on Wednesday, with WTI crude nearing $69 per barrel amid mounting concerns over Middle East shipping disruptions and a revised U.S. production outlook. The rally, which pushed futures to a two-week high, comes as technical momentum builds near the critical $70.90 resistance zone, a level tied to a major Fibonacci retracement on the weekly chart.
Highlights
- WTI crude oil rose to $69 as Red Sea tensions and lower U.S. output projections lifted prices
- Price now challenges $70.90 resistance, aligned with the 0.618 Fibonacci retracement level
- U.S. crude inventories rose again, and Trump’s tariff stance clouds global demand outlook
Supply risks rise as technical reversal strengthens
The recent rebound from the $61 region has been driven in part by fresh geopolitical tensions. Renewed Houthi attacks on Red Sea shipping routes have amplified fears of supply bottlenecks, particularly for crude flows from the Middle East to Europe and Asia. Meanwhile, the U.S. Energy Information Administration (EIA) downgraded its 2025 production outlook, citing reduced drilling activity in response to lower prices.
From a technical standpoint, WTI has broken above multiple descending trendlines and is currently trading above all major exponential moving averages on the 4-hour chart. The rally is being guided by a rising trendline from the June lows, with bulls now testing the $68.50 to $70.90 region. This zone represents both historical resistance and the 0.618 Fibonacci retracement level drawn from the multi-month downtrend off $80.73.
Demand outlook mixed as inventories climb
While bullish technicals and tightening supply support the current uptrend, caution lingers amid growing U.S. crude inventories and global demand concerns. The American Petroleum Institute (API) reported a surprise rise in stockpiles for a second consecutive week. Additionally, President Trump’s refusal to extend the August 1 tariff deadline raises the specter of renewed trade frictions, which could dampen energy demand.
For now, oil traders are watching whether WTI can decisively break through the $70.90 threshold. A confirmed move higher would likely open the path toward $75.25 and potentially $80. On the downside, failure to sustain current levels could prompt another rotation toward the $64-$66 range.
In earlier reports, we noted that WTI was attempting to reclaim lost ground above $66, following its bounce from key support near $61.18. With the breakout confirmed and buyers defending the $67.90 region, this advance reinforces the bullish reversal structure building since June.
