- WTI attracts fresh sellers during the Asian session, though the downside potential seems limited.
- Rising geopolitical tensions in the Middle East could support the commodity and help limit losses.
- Reduced Fed rate cut bets underpin the USD, which might keep a lid on gains for the black liquid.
West Texas Intermediate (WTI) Crude Oil prices struggle to capitalize on the previous day’s modest gains and meet with a fresh supply during the Asian session on Wednesday. The commodity is currently trading below the $93.00 mark, down over 2.5% for the day, and remains close to the weekly low, touched on Monday.
Sources citing American Petroleum Institute figures said that US crude inventories rose by 6.56 million barrels in the week ended March 13. This, in turn, prompts some selling around Crude Oil prices, though heightened geopolitical uncertainty stemming from ongoing conflicts in the Middle East and supply concerns might continue to act as a tailwind for the black liquid.
The US-Israel war on Iran is in its third week and has shown no clear signs of de-escalation. In fact, a senior Iranian official said that Iran’s new supreme leader rejected de-escalation offers conveyed by intermediary countries. This comes amid the closure of the Strait of Hormuz, which handles around 20% of global supply, and has led to severe disruption of energy trade.
Meanwhile, the US military targeted sites along Iran’s coastline near the Strait of Hormuz. Moreover, Iran’s top security official, Ali Larijani, and the head of the paramilitary Basij force, Gholamreza Soleimani, were killed in Israeli air strikes on Tuesday. Iran’s army chief Amir Hatami said that Tehran’s response to the assassination will be decisive and regrettable.
This keeps geopolitical risks in play and might limit the downside for Crude Oil prices. The price action, however, suggests that market players have already fully priced in the current situation. Moreover, reduced bets for more rate cuts by the US Federal Reserve (Fed) underpin the US Dollar (USD) and warrant caution before placing bullish bets around Oil prices.
