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- WTI price drifts lower to near $89.10 in Wednesday’s early European session.
- US crude inventories fell by 2.6 million barrels in the week ending August 28, API showed.
- Iran launched retaliation after US strikes on IRGC targets across Iran.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $89.10 during the early European trading hours on Wednesday. WTI declines as traders take some profits. However, the potential downside of black gold might be limited amid ongoing tensions in the Middle East.
Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed it has launched a “heavy” ballistic missile attack on Prince Hassan airbase and a US Marine base in Jordan in response to earlier US strikes that killed civilians.
The US military said that its forces completed a wave of strikes against Iranian targets on Tuesday after what it said were attempted attacks by Iran against commercial shipping and American service members. US President Donald Trump warned of more attacks to come if Tehran responded. Escalating tensions in the Middle East could raise fears of oil supply disruption and boost the WTI price.
US crude oil inventories dropped more than expected last week. According to the American Petroleum Institute (API), crude oil stockpiles in the US for the week ending August 28 fell by 2.6 million barrels, compared to a rise of 4.2 million barrels in the previous week. The market consensus was for a decline of 800,000 barrels.
Traders await the release of the US Energy Information Administration (EIA), which is due later on Wednesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might undermine the WTI price.
Energy risk premia build as US–Iran tensions expose fragile Gulf security
According to TD Securities, the latest flare-up between the US and Iran underscores just how precarious the geopolitical backdrop remains for energy markets. Strategists at the bank stress that the “latest escalation in the conflict between the US and Iran continues to highlight how flimsy any deal or MoU headlines really are,” reinforcing the sense that headline-driven truces offer little durable assurance for flows through key chokepoints such as the Strait of Hormuz.
Technical Analysis: WTI maintains a constructive bullish bias in the near term
In the daily chart, WTI US Oil sits comfortably above the 100-day moving average (MA) and the Bollinger middle band, suggesting a constructive bullish bias while the uptrend remains supported by these underlying levels. The Relative Strength Index (14) around 62 points to firm but not yet extreme upside momentum as price edges closer to the upper Bollinger band.
On the topside, immediate resistance is aligned with the upper Bollinger band near $89.55; a daily close above this cap would open the way for further gains. On the downside, initial support is seen at the 100-day MA around $85.10, ahead of the Bollinger midline near $83.15, with the lower band down at $76.70 acting as a more distant safety net should a deeper correction unfold.
