Key Moments
- WTI US Oil trades around $80.80, up 0.40% on Friday, recovering part of a two-day pullback.
- Severe disruptions through the Strait of Hormuz and Bab el-Mandeb keep a sizable risk premium in Oil markets.
- OPEC cut its 2024 Oil demand growth forecast to 580,000 bpd from 780,000 bpd, while the IEA also reduced its outlook.
Supply Fears Lift Prices After Recent Pullback
West Texas Intermediate (WTI) US Oil is moving higher on Friday, trading near $80.80 at the time of writing, a gain of 0.40% on the session. The move retraces a portion of losses from the prior two days of correction, as investors refocus on the risk of energy supply disruptions in the Middle East.
Price action reflects a tug-of-war between persistent supply concerns and a weakening outlook for global consumption, leaving WTI caught in a range despite elevated geopolitical tensions.
Strait of Hormuz and Bab el-Mandeb Keep Risk Premium Elevated
Flows through the Strait of Hormuz remain a key support for crude benchmarks. While commodity vessel traffic improved modestly on Thursday, it is still sharply below pre-conflict norms. Citing Kpler data via Reuters, the article notes that current transits are running under the daily average of 12 observed so far in August, compared with roughly 130 to 140 vessels per day before the war.
Risks are also heightened around the Bab el-Mandeb Strait. Together with the Strait of Hormuz, these chokepoints account for about 27% of global energy supply. As long as shipping remains heavily constrained, Oil markets are likely to retain a substantial risk premium.
Diplomatic Signals Mixed as Iran Rules Out Talks With US
On the diplomatic side, Iran has stated it is not participating in talks with the United States regarding reopening the Strait of Hormuz. At the same time, Tehran indicates it is in the final phase of discussions with Oman over joint management of navigation through the critical passage.
Demand Outlook Softens as OPEC and IEA Cut Forecasts
Concerns over global demand are acting as a counterweight to supply-driven support for WTI. The Organization of the Petroleum Exporting Countries (OPEC) has reduced its forecast for this year’s global Oil demand growth to 580,000 barrels per day (bpd), down from 780,000 bpd previously. This marks the fourth straight downward revision.
The International Energy Agency (IEA) has also lowered its demand projections, cautioning that extended conflicts and elevated prices are starting to curb consumption. These shifts in outlook threaten to cap the upside for WTI even as supply risks remain acute.
Rabobank: Inventories Sliding Toward Historic Lows
Strategists at Rabobank emphasize the heightened volatility in crude prices since the end of June’s memorandum of understanding. They note that “Brent crude has swung between roughly $72- 102/bbl, following every rumor of a peace deal or renewed escalation,” illustrating how sensitive prices are to developments around the Hormuz crisis.
Rabobank highlights that tanker “transits are still running at roughly 3 to 10 ships a day against 130-140 before the war and would need to recover to ~80 to stabilize energy markets,” even with diversionary flows using Saudi Arabia’s East-West Pipeline to the Yanbu export terminal and the UAE’s Fujairah oil terminal. The bank adds that “the ongoing stockpile drawdown has left global inventories heading toward historic lows, especially in refined products,” underscoring their view that the market remains highly vulnerable to further supply shocks.
| Key Middle East Shipping Metrics | Current / Recent | Pre-war / Reference Level |
|---|---|---|
| Strait of Hormuz – average vessel transits (August) | Below 12 per day | Approximately 130-140 per day |
| Hormuz-related tanker transits (Rabobank) | Roughly 3 to 10 ships per day | 130-140 ships per day |
| Level Rabobank says needed to stabilize markets | ~80 ships per day | – |
| Share of global energy supply via Hormuz & Bab el-Mandeb | Around 27% | |
Technical Picture: WTI Holds Above Key Support Levels
On the one-hour chart, WTI US Oil is quoted near $80.68, with a slightly bearish tone as it remains constrained below the 100-hour simple moving average (SMA) at $81.18 and a descending resistance trend line that now acts as supply around $81.94.
Despite that, the price still trades above the 200-hour SMA at $78.75 and above a horizontal support area at $80.00. This configuration suggests that the latest move may be a corrective pullback within a broader constructive setup. The Relative Strength Index (RSI) is hovering near 46, tilting mildly to the downside but not indicating oversold conditions.
| WTI US Oil – Intraday Technical Levels | Price / Level | Comment |
|---|---|---|
| Last price (1-hour chart) | $80.68 | Trading with a mildly bearish bias |
| 100-hour SMA | $81.18 | Immediate resistance |
| Downtrend resistance line | Near $81.94 | Overhead supply zone |
| Next resistance | $83.57 | Stronger upside barrier |
| Additional resistance | $84.50 | Higher resistance area |
| Horizontal support | $80.00 | Initial downside level |
| 200-hour SMA | $78.75 | Key support below $80.00 |
| RSI (1-hour) | Around 46 | Leaning slightly lower, not oversold |
On the upside, traders are monitoring the 100-hour SMA at $81.18 as the first resistance, followed by the descending trend line near $81.94. Above that, more substantial barriers are seen at $83.57 and then $84.50. On the downside, the $80.00 horizontal level is initial support, ahead of the 200-hour SMA at $78.75. A clear break below both would likely signal scope for a deeper bearish extension in the near term.
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