WTI falls to near $88.50 on G7 reserve release
- WTI price tumbles to near $88.60 in Tuesday’s early Asian session.
- G7 countries announced they will release 100 million bbl of crude and diesel from strategic reserves.
- Concerns over Middle East tensions might cap the upside for crude oil prices.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $88.60 during the early Asian trading hours on Tuesday. WTI faces some selling pressure as rising Middle East crude exports and a release of oil stocks by the Group of Seven nations boost supplies.
On Friday, the Group of Seven nations (G7) agreed to release 100 million barrels of diesel and crude from emergency reserves and pledged to refrain from energy export restrictions after pressure from US President Donald Trump. The release will add to Middle Eastern crude exports, which climbed above pre-war levels in four of the seven days of the final week of September, data showed on Monday.
Late Monday, Trump signed an executive order to ease restrictions on the use of a tax-exempt variety of diesel, per Bloomberg. Trump said the measure would “officially waive the off-road requirement and allow anyone to purchase tax-free, red-dyed diesel for any reason.” This move marks his latest bid to pare costs for the fuel ahead of November’s midterm elections.
“The G7 decision to tap strategic reserves is taking some of the immediate supply anxiety out of the price, while there’s a growing view that Saudi export volumes are moving back toward pre-war levels, even if those barrels are still moving at higher cost and via less efficient routes,” said Tim Waterer, chief analyst at KCM Trade.
“That combination is enough to subdue prices for now even though the risks of further damage to energy infrastructure around the Gulf region haven’t gone away,” Waterer added.
Traders brace for the American Petroleum Institute (API) crude oil stockpiles report later on Tuesday. 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.
Yemen’s Houthi group on Monday claimed that it had carried out three military operations targeting two airports, an oil facility, and military sites across Saudi Arabia. Rising tensions in the Middle East might help limit the WTI’s losses.
Oil risk persists as US war in Iran enters new escalation phase
Analysts at Rabobank warn that the “U.S. War in Iran is about to reach a new stage of escalation,” a development they believe will keep oil prices elevated even as continued crude flows through the Strait of Hormuz risk lulling markets into “a new sense of complacency.” The bank’s Energy Markets team cautions that “the current shuttle system is still fragile,” with “key targets like terminals and refineries providing Iran with ripe opportunities to re-exert their grasp over the Strait of Hormuz’s energy flows,” underscoring that the apparent resilience of regional supply routes may prove deceptive.
Technical Analysis: WTI holds a neutral-to-bearish near-term bias
In the daily chart, WTI US Oil is consolidating after its recent pullback, holding above the Bollinger Bands lower band support and the 100-day moving average (MA), but still capped beneath the Bollinger middle band resistance. This configuration, together with a 14-day Relative Strength Index (RSI) near 46 and pointing lower, suggests fading bullish momentum and a neutral-to-bearish near-term bias while price remains under the mid-band.
On the topside, immediate resistance is located at the Bollinger Bands middle band near $93.35, ahead of the upper band barrier around $101.10. On the downside, initial support emerges at the recent price pivot in the $88.35 area, followed by the Bollinger lower band around $85.58, with the 100-day MA near $84.35 reinforcing a broader demand zone; a clear break below these latter levels would open the door to a deeper correction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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