Oil Rally Accelerates Despite Surprise API Inventory Build

Traders' Opinions

Summary:

WTI climbed above $86 to fresh six-week highs as escalating US-Iran tensions and new shipping disruptions in the Red Sea heightened fears of a broader global oil supply crunch.

BUY WTI

EXP

TRADING

86.494

Entry Price

98.000

79.000

85.843 +1.653 +1.96%

0.0

Pips

Flat

79.000

Exit Price

86.494

Entry Price

98.000

Oil prices extended their rally on Wednesday, with West Texas Intermediate (WTI) climbing above $86 per barrel to fresh six-week highs as escalating military tensions between the United States and Iran intensified concerns over global energy supplies. The benchmark has now surged roughly 26% in July, supported by growing fears that the conflict could severely disrupt crude exports from the Middle East.

The geopolitical backdrop remains the primary driver of the market after the US launched its 11th consecutive day of strikes against Iranian targets. President Donald Trump also warned that Washington could target Pickaxe Mountain, a site believed to house an underground nuclear facility. Tehran responded by warning that any attack on its nuclear infrastructure would trigger a broader regional conflict, raising the stakes for energy markets.

Supply concerns deepened after Reuters reported that three Saudi oil tankers turned back in the Red Sea following Yemen's Iran-backed Houthi announcement of a blockade of the Bab el-Mandeb Strait, another critical shipping route for Middle Eastern crude exports. The disruption comes as traffic through the Strait of Hormuz remains heavily restricted, reinforcing fears that two of the world's most important energy corridors could remain under pressure simultaneously.

Analysts at Rabobank noted that Brent and WTI continue to rally as overlapping geopolitical tensions, infrastructure disruptions, and tightening diesel markets increase the risk of a broader global supply shortage.

Meanwhile, bearish inventory data had little lasting impact. The American Petroleum Institute reported that US crude inventories unexpectedly rose by 2.6 million barrels last week, compared with expectations for a 1.5 million-barrel draw. Under normal market conditions, such a build would pressure prices lower. However, in my view, the geopolitical risk premium has become the dominant force, leaving traders largely willing to overlook weaker short-term demand signals as long as supply disruptions remain a credible threat.

Technical Analysis

WTI crude oil remains firmly in a bullish trend after breaking out of its multi-week descending channel, a move that signals buyers have regained control of the market. On the 4-hour chart, the breakout above the former trendline resistance and the $78.00–$79.00 zone has shifted market sentiment decisively higher. That former resistance has now turned into a strong support area, reinforcing the strength of the current uptrend.

After an impressive rally, prices are now testing the $86.50–$87.00 resistance zone, where some profit-taking has emerged. At this stage, the pullback appears to be a healthy pause rather than a change in trend. As long as WTI remains above the $84.50–$85.00 support region, buyers are likely to stay in control and continue viewing dips as buying opportunities.

A sustained break above $87.00 would confirm the next bullish leg and could open the door for a move toward the $98.00 resistance area, a level not seen since the earlier stages of the year. On the downside, only a decisive break below $84.00 would weaken the current bullish outlook and increase the risk of a deeper correction back toward the $78.00–$79.00 breakout zone.

Momentum continues to support the positive outlook. The Relative Strength Index (RSI) remains comfortably above the 50 mark, indicating that bullish momentum is still intact despite approaching overbought territory. Meanwhile, the Moving Average Convergence Divergence (MACD) remains in positive territory, although momentum has started to moderate slightly, suggesting the market may consolidate before attempting another move higher.

TRADE RECOMMENDATION

BUY WTI CRUDE OIL

ENTRY PRICE: 86.50

STOP LOSS: 79.00

TAKE PROFIT: 98.00

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