Key Moments
- WTI futures on NYMEX trade around $97.20 during Wednesday’s European session after giving back part of earlier gains.
- Hotter-than-expected April US CPI data at 3.8% YoY boosts expectations for a more hawkish Federal Reserve, weighing on demand prospects for oil.
- Concerns about a prolonged disruption in the Strait of Hormuz due to stalled US-Iran talks continue to underpin a firm medium-term outlook for crude.
Macro Drivers Weigh on Near-Term WTI Performance
West Texas Intermediate (WTI) futures on NYMEX are trading close to $97.20 in European hours on Wednesday, slipping from earlier highs as traders trim positions amid renewed worries about the demand outlook. The pullback comes as expectations rise that the Federal Reserve may lean more aggressively toward tighter policy following the latest US inflation data.
The headline US Consumer Price Index (CPI) release on Tuesday showed inflation accelerating by 3.8% year-on-year, compared with consensus forecasts of 3.7% and the March reading of 3.3%. The stronger print has reinforced bets that the Fed may maintain or even intensify its hawkish stance, a scenario that typically dampens prospects for energy consumption.
In theory, tighter monetary policy from the Fed is negative for the oil demand outlook, as higher borrowing costs can slow economic activity and energy use. This shift in rate expectations has contributed to the current correction in WTI prices.
Geopolitical Risks Support a Firm Broader Outlook
Despite the intraday pullback, the broader trend for crude remains underpinned by supply-side risks. Market participants remain focused on the risk of a prolonged closure of the Strait of Hormuz, a key transit route for nearly 20% of global energy flows. The absence of progress in negotiations between the United States and Iran is heightening concerns that the disruption could persist, keeping a floor under prices.
Looking ahead, investors are also watching the scheduled meeting between US President Donald Trump and Chinese leader Xi Jinping on Thursday and Friday, as any developments could have implications for global growth expectations and, by extension, energy demand.
WTI Technical Overview
During the session, WTI US Oil slips toward $97.20, but short-term technicals still point to a constructive bias. Prices continue to trade above the 20-day exponential moving average (EMA), currently near $95.80, indicating that the latest weakness appears more like a corrective phase within an ongoing uptrend rather than a trend reversal.
The Relative Strength Index (RSI) is hovering around 53, which implies a neutral-to-positive configuration. This reading signals that bullish momentum remains in place, but conditions are not yet stretched to the upside.
| Technical Level | Price | Implication |
|---|---|---|
| Current area | $97.20 | Ongoing pullback within broader constructive bias |
| 20-day EMA (support) | $95.80 | Break lower could trigger deeper retracement toward $90 |
| Deeper downside target | $90.00 | Potential objective if 20-day EMA fails on a closing basis |
| Psychological resistance | $100.00 | Key area for renewed upside attempts |
| April 30 high | $107.35 | Further target if bullish momentum reasserts above $100 |
On the downside, the first notable support sits at the 20-day EMA around $95.80. A decisive close below this level would open the door for a more pronounced decline toward the $90 region. As long as this moving average is defended on a closing basis, the broader recovery profile should remain intact, preserving the potential for renewed pushes toward the psychological $100 mark and, beyond that, the April 30 peak at $107.35.
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