Fundamental Analysis West Texas Intermediate (WTI) Oil Price declined after rising for two sessions. On Wednesday, the price traded at $88.70 during European Trading Hours. However, the price of crude oil may soon bounce back due to increased tensions between the United States (US) and Iran, which raise fears of disruptions to energy supplies from the region. US President Donald Trump has announced new attacks against Iranian military installations near the Strait of Hormuz in retaliation to Tehran's attempt to mine the water passage and its earlier attack on a US base. Moreover, Trump has threatened to respond with even stronger military measures in case Iran retaliates. In response, Iran has alleged that it has already struck US bases throughout the region as well as attacked Jordan with missiles. US Treasury Secretary Scott Bessent declared that Iran's economy is entering an "acceleration phase" of bankruptcy. At the same time, Bessent stressed that, despite the ongoing confrontation, 17 million barrels of crude oil were transported through the Strait of Hormuz on Monday, thereby proving that Tehran is not controlling the passage.
Technical Analysis Crude oil (USOIL) is at a technical crossroads on the daily chart. The commodity is trading at $88.95, having recovered from the $67.50 lows hit in June. The technical structure is better, with a series of higher lows on the charts since June. However, the recovery will face resistance between $89.00 and $91.20. Reaction to the downtrend line connecting the April/May highs could limit the upside. If price closes above $91.20 on a daily basis, the recovery gains strength, opening the door to a move towards $93.80-$96.50. Moving average structure has favored the recovery. Price is above the shorter-term moving averages, and the long-term averages have flattened out after a few months of negative momentum. The bullish trend line from the June lows remains intact and intersects at the $83.30-$84.00 level, indicating that $83.30 is a technical support level. A daily breakdown below $83.30 will undermine the structure of higher lows, targeting $80.60 and then $78.00-$79.00. Ichimoku Cloud seems to be forming a constructive pattern, even though the longer-term trend has not yet turned bullish. Price has tested the higher part of the cloud around $89.00, whereas the future cloud looks thin and mixed. Any breakout above the cloud will boost the chances of trend confirmation and make the $86.00 - $88.00 range the support area. However, any failure to break the cloud could keep crude oil range-bound. Momentum oscillators are favoring buyers, though they have gotten overbought. The 14-day RSI stands at 64.3, suggesting positive momentum without reaching overbought territory. The stochastic oscillator is at 90, indicating positive upward momentum while also suggesting a potential short-term retracement. MACD line remains positive, and the histogram confirms the trend recovery, though momentum seems to be consolidating. Based on the Fibonacci approach, the bounce is testing the upper retracement area of the June to August move. The 61.8% retracement is at $88.00-$89.00, making the current area critical. Maintaining above $88.00 will leave the breakout attempt intact, while failure below $89.00 may see the price head towards $86.00 and $83.30. In general, the outlook remains cautiously bullish above $83.30, yet confirmation is needed via a daily break above $91.20.
