Crude oil prices have been on the rise since early December, with WTI crude reaching $87.60. However, the trend has since then shifted to bearish, and prices have been declining since. Today, despite a significant reduction in EIA (Energy Information Administration) crude inventory, the price of oil did not see an increase. This suggests that sellers are currently in control of the market.

WTI Oil Chart Daily – The 20 SMA Has Turned into Resistance

Oil prices are experiencing a decline amid the potential for a political resolution in Gaza. The prospect of a gradual release of tension over several weeks, could pave the way for long-term peace in the region which is bearish for crude Oil. This news has prompted selling in oil, with WTI (West Texas Intermediate) dropping by $1.26 to $82.40s yesterday, marking its lowest level since last week.

Geopolitical Risk Oil Premium Falling

Some estimates suggest that there is an $10 premium in oil prices attributed to geopolitical tensions. However, it could be higher or lower, especially since the Iran-Israel conflict abating. Nevertheless, the exact impact remains uncertain until a cease-fire agreement is reached.

The US administration has engaged in communications with Israel, advising them to refrain from imposing severe attacks on Iran, as they aim to avoid a rise in Oil prices. Additionally, throughout Biden’s administration, there have been quiet relaxations of sanctions on Iran, which is also bearish for Oil prices.

Besides that, the proposed Oil price caps by Russia have not been put into effect, suggesting that they may be seen as ineffective measures. However, it’s possible that this decision was made to facilitate the redirection of energy to areas where it’s needed, or to release stranded US-owned assets.

WTI Crude Oil Live Chart