Will WTI Crude Rebound past $104 as Strait of Hormuz Supply Recovers?

Quick overview

WTI crude oil (USOIL) is stable near $97.69 up 0.11% following the geopolitical normalization. Following the U.S.-Iran ceasefire conditional passing the six-week milestone, the panic buying has subsided, shifting market attention back to demand/supply dynamics and central bank policies from war fear.

WTI Crude Oil Key Drivers today

• Hormuz recovery: Tankers in the Strait of Hormuz are back at 70 to 78% of pre-crisis levels, but normalization will still take weeks as structural repairs and high insurance rates continue.
• Non-OPEC Supply strength: U.S. production at 13.3 million barrels per day (the new record level), Guyana, and Brazil continue to support global inventory and prevent a massive run-up.
• Inflation data: Concern of a more prolonged rate hike as sticky US headline inflation sits at 3.8% puts pressure on the industrial complex. Expect more retail sales and PMI data to signal demand.

WTI Crude Oil Technical Analysis

The 2-hour timeframe is looking bullish after a retest of the black trendline that began in $93.87. A hammer candle appeared after the retracement before a small pullback that defended the 0.382 to 0.5 Fibonacci level, launching to an orderly bounce.

The consolidation within the rising trend channel is in the form of a flag, and an oscillator is neutral at 35 to 45 but with a divergent up-turn, suggesting short sellers are exhausted.

Resistance is at $98.50, $99.97 to 101.70 (a confluence of the red moving average line) and a swing high at $104.59. Support is seen at $97.05, $99.50 (the blue moving average) and $93.87 (structural support).

Trade Idea

A high-risk long continuation trade is emerging as the instrument returns to the center of the channel midline.

• Entry: A buy-stop entry above $98.50
• Take Profit: $101.70 (TP1) and $104.59 (TP2)
• Stop loss: $96.90 under support.

Conclusion

WTI crude oil is recovering from extreme geopolitical risks, but structural supply/demand fundamentals are providing some support. With non-OPEC supply growth and OPEC+ compliance acting as key balancing factors, the market remains highly sensitive to an unexpected draw in crude inventories as a June OPEC+ meeting approaches. A technical rebound is expected in a confluence of moving averages in the coming days. The best way to take advantage of the situation in the current cyclical market phase is a trendline support/boundary play.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

Is a Massive Silver Breakout Looming as Supply Deficits Enter Sixth Year?

1 h ago

Save

Will Gold Prices Skyrocket to $5,000 as Inflation Hits Three-Year Highs?

2 hs ago

Save

Natural Gas Futures Hold after Release of Wholesale Gas Price Survey  

23 hs ago

Save