The West Texas Intermediate (WTI) dropped for two consecutive days as investors focused on the ongoing US and Iran ceasefire and its implication on the oil market. It dropped to $102.50 on Friday, down from last week's high of $111.
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US and Iran Ceasefire Continues
The WTI crude oil price dropped despite the ongoing ceasefire between the United States and Iran. This ceasefire has led to a major blockade, which has led to a sharp decline in the amount of crude oil passing through the Strait, which accounts for nearly 20% of all the oil.
Crude oil traders have opted for other options, including the large Saudi Arabian pipeline that is carrying over 7 million barrels of oil per day. At the same time, US oil exports have jumped to a record high this year, a trend that may continue in the foreseeable future.
The risk, however, is that the United States will decide to attack Iran to force the leaders to a deal. Such a move would lead to a higher crude oil prices as Iran would intervene by bombing infrastructure in the region, including the Saudi Arabian pipeline. It may also decide to use the Houthis to block traffic in the Red Sea.
The WTI crude oil price will also react mildly to the latest OPEC+ meeting. Reports suggest that the members agreed to boost supply in June this year. They will increase the daily production by nearly 200k barrels per day. The decision comes a few days after the United Arab Emirates (UAE) announced that it will leave the cartel.
WTI Crude Oil Price Technical Analysis
The weekly timeframe chart shows that the WTI crude oil price bottomed at $79 in April and then rebounded to a high of $111 last week. It then settled at $102.50.
The price has formed a golden cross pattern as the 50-week and 200-week Exponential Moving Averages (EMA) crossed each other. This crossover is one of the most common bullish crossover patterns in technical analysis. It has moved above the Major S/R pivot point at $100.
The Relative Strength Index (RSI) has turned around and is nearing the overbought level of 70. Therefore, the price will likely continue rising as bulls target the next key resistance level at $110. A move above that level will point to more gains, potentially to the year-to-date high of $119.05.
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