Oil Bulls Eye Higher Prices as Stockpiles Shrink

Traders' Opinions

Summary:

Oil prices climbed to one-month highs as escalating US-Iran tensions and a sharp decline in shipping through the Strait of Hormuz heightened concerns over global supply disruptions, while traders awaited fresh US inventory data.

BUY WTI

EXP

TRADING

80.004

Entry Price

95.000

70.000

79.296 +1.548 +1.99%

0.0

Pips

Flat

70.000

Exit Price

80.004

Entry Price

95.000

West Texas Intermediate (WTI) crude oil extended its advance on Tuesday, consolidating around the $80.00 mark after climbing to its highest level in more than a month. The benchmark is now trading roughly 18% above the lows recorded in early July as escalating geopolitical tensions continue to inject a significant risk premium into the energy market.

The latest leg higher comes as the conflict between the United States and Iran entered its sixth consecutive day, with both sides exchanging fresh attacks. The US military also announced the reinstatement of a blockade on vessels traveling to and from Iran, intensifying concerns over global energy supplies.

Market attention remains firmly focused on the Strait of Hormuz, a critical route for nearly one-fifth of the world's oil shipments. Commercial traffic through the waterway has fallen sharply after Iran's Islamic Revolutionary Guard Corps declared the strait closed "until further notice" and claimed responsibility for disabling two supertankers that allegedly ignored navigation warnings. Although Washington insists that oil continues to flow through the region, shipping data suggests vessel movements have dropped to levels last seen before the previous ceasefire.

In my view, the oil market remains driven almost entirely by geopolitical developments rather than traditional supply-and-demand fundamentals. As long as uncertainty surrounds the Strait of Hormuz, traders are likely to keep pricing in a sizeable geopolitical premium, leaving crude prices vulnerable to further upside spikes.

Investors are also awaiting the American Petroleum Institute's (API) weekly inventory report later today. Expectations are for a 2.7 million-barrel decline in US crude stockpiles, which would mark a 13th consecutive weekly drawdown. Another sizeable inventory decline would reinforce concerns over tightening supplies and could provide fresh momentum for crude prices if geopolitical tensions remain elevated.

Technical Analysis

From a technical perspective, WTI crude oil has shifted decisively back into a bullish structure after staging an aggressive rebound from the $67.00–$68.00 demand zone, where buyers stepped in to reverse the broader downtrend. On the 4-hour chart, price has rallied sharply through several resistance levels and is now consolidating around the $79.50–$80.00 region, a former supply area that is beginning to transition into support. The strength of the recent advance suggests that bullish momentum remains firmly intact, although a brief period of consolidation or a modest pullback would be healthy before the next leg higher.

The $78.50–$79.00 zone is now the first line of support and represents a key breakout level. Holding above this region would confirm that buyers remain in control and increase the probability of another impulsive move higher. A break below this support would likely trigger a short-term correction toward $76.00–$77.00, but such a decline would still be viewed as a pullback within the broader recovery unless sellers force a sustained move beneath $73.00.

On the upside, the technical outlook continues to favor further gains. A sustained break above $80.50 would confirm continuation of the current bullish trend and expose the next major resistance around $86.00, where previous selling pressure emerged. Clearing that barrier would likely accelerate bullish momentum toward the $95.00 supply zone, which marks the next significant technical objective and aligns with the projected path shown on the chart.

Momentum indicators also favor the bulls. The Relative Strength Index (RSI) is likely holding comfortably above the neutral 50 level and approaching overbought territory, reflecting strong buying interest without yet signaling exhaustion. Meanwhile, the Moving Average Convergence Divergence (MACD) is expected to remain above the zero line with a positive crossover, indicating that upside momentum continues to strengthen despite the possibility of short-term consolidation following the sharp rally.

TRADE RECOMMENDATION

BUY WTI CRUDE OIL

ENTRY PRICE: $80.00

STOP LOSS: $70.00

TAKE PROFIT: $95.00

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