WTI crude settled sharply higher as reduced shipping traffic through the Strait of Hormuz kept a geopolitical risk premium in oil prices. The rally pushed the price above a key technical level, though softer demand expectations and possible OPEC+ output increases are capping further gains.
WTI crude settled at $84.50, up $2.10 or 2.55% on the day, with the advance accelerating in the final hours of trading.
Strait of Hormuz keeps risk premium elevated
The Strait of Hormuz remains the key driver behind the move, as sharply reduced shipping traffic continues to fuel concerns about potential Middle East supply disruptions. At the same time, U.S.-Iran negotiations remain stalled. That keeps a geopolitical risk premium embedded in crude prices.
Yet forces are working to limit the upside. Gulf producers continue to find alternative routes to move barrels to market, easing some of the immediate supply concerns. Meanwhile, softer expectations for global demand and plans for increased OPEC+ production remain potential headwinds. As a result, crude stays caught between Middle East supply risks providing support and demand concerns capping the rally.
Price breaks above key technical level
WTI spent much of the session trading above and below its 100-hour moving average at $82.47, before buyers took firmer control late in the day. The surge then carried the price above last week's swing high near $84.54, with the day's high extending to $84.88.
The rally also pushed WTI above the 50% midpoint of the decline from the July 23 high to the August 5 low, at $83.87. That level was also a close support level, and staying above it keeps buyers in control.
$83.87 is now the support level to watch: a move back below it would take some of the momentum out of the late-session breakout.
Source: Investinglive
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