The benchmark price for West Texas Intermediate (WTI) oil is weakening after a recovery, reaching $95.80-$95.85, a one-and-a-half-week high, and is under pressure as it returns to the 20-day SMA over the past few hours. Currently, oil prices are above $93.50.
Despite the temporary ceasefire extension between the US and Iran, traders remain skeptical of the prospects for sustainable de-escalation, given the lack of real progress in peace negotiations. Furthermore, rising tensions around the Strait of Hormuz continue to raise concerns about prolonged disruptions in this strategically vital waterway, creating a high level of geopolitical risk and supporting rising oil prices for the third consecutive day.
On Tuesday, U.S. President Donald Trump confirmed that the blockade of Iranian ports by the U.S. Navy will continue. In the same vein, Iran's semi-official news agency Tasnim reported the Islamic Revolutionary Guard Corps' Navy seized two vessels, and on Wednesday, three container ships were shelled in the strait. These events, combined with an unexpected reduction in U.S. oil inventories, provide additional momentum for rising oil prices.
Meanwhile, the recent spike in prices was fueled by false reports of an attack on Tehran. However, this momentum quickly wanes in the absence of any significant news. This, in turn, requires traders focused on growth to exercise caution and be ready for potential further price increases. Nevertheless, the fundamental factors indicate that the path of least resistance for oil prices remains upward.
From a technical perspective, the picture is ambiguous: prices have dropped below the 20-day SMA, suggesting some weakening among bulls, but the relative strength index remains positive, confirming that bulls still dominate the market. The merging of the 9- and 14-day EMAs, along with the 50-day EMA, suggests a sideways movement in the near term. Therefore, traders looking to open directional positions should wait for a directional impulse.
