West Texas Intermediate (WTI), the benchmark US crude oil price, continued its decline during the Asian session on Tuesday, trading around the $88.75 region and marking a drop of over 1% for the day. This follows a sharp retracement from the mid-$93.00s seen in the previous session, with the commodity experiencing follow-through selling pressure. The recent easing of geopolitical tensions contributed to the downward movement, as both Iran and Israel announced on Monday that they had halted attacks on each other after an appeal from US President Donald Trump. This development has reduced the geopolitical risk premium and exerted pressure on crude oil prices. However, Iran has warned that it would resume hostilities if Israel continues to target Hezbollah in Lebanon, and ongoing tensions over Tehran's nuclear program and the Strait of Hormuz continue to support some risk premium in the market [1].
From a technical perspective, WTI maintains a bearish near-term bias, trading below the 200-period Simple Moving Average (SMA) on the 4-hour chart, which acts as a key resistance level. The Moving Average Convergence Divergence (MACD) indicator remains below the zero line, and the Relative Strength Index (RSI) is around 42, indicating subdued demand rather than oversold conditions. The immediate downside focus is on the horizontal support between $86.50 and $86.00, with a break below this range potentially exposing crude oil prices to further declines toward sub-$81.00 levels, which corresponds to the April monthly swing low. On the upside, resistance is seen at the 200-period SMA at $95.25, and a sustained move above this level would be needed to shift the prevailing bearish structure. However, current momentum indicators suggest that any rallies are likely to encounter selling pressure below this average [1].
Market participants are closely monitoring developments in the Middle East, as further escalation or de-escalation could significantly impact crude oil prices. For now, the technical setup and easing geopolitical tensions point to a bearish outlook for WTI, with the potential for further weakness if selling pressure resumes [1].
CONCLUSION
WTI crude oil prices remain under pressure, trading below $89 as easing geopolitical tensions have reduced the risk premium. Technical indicators suggest a bearish outlook, with further downside possible if key support levels are breached. Market sentiment is cautious, with traders awaiting further developments in the Middle East.