WTI Oil Under Pressure as Russian Supply Concerns Weigh on Prices

Commodity

Summary:

West Texas Intermediate (WTI) crude oil prices remain under pressure, trading near $66.50 per barrel during early Asian trading on Wednesday.

SELL WTI

Close Time

CLOSED

66.600

Entry Price

64.000

68.500

57.233 -0.408 -0.71%

190.0

Pips

Loss

64.000

68.509

Exit Price

66.600

Entry Price

68.500

WTI crude oil prices have experienced a notable decline, trading around $66.50 per barrel during the Asian trading session on Wednesday, marking the second consecutive day of downward pressure. This bearish momentum follows heightened concerns over increased Russian oil supply, particularly as the geopolitical landscape remains volatile and supply expectations shift.

The primary catalyst behind the price pressure is the expectation that Russia, one of the world’s largest oil producers, could ramp up its crude oil output following the recent temporary ceasefire agreement between US President Donald Trump and Russian President Vladimir Putin. On Tuesday, both leaders reached an agreement to pause strikes on energy infrastructure in the midst of the ongoing Ukraine conflict, but Putin refused to endorse a broader ceasefire that would have lasted for a month. This decision highlights the persistent geopolitical tensions and underscores the fragility of any potential peace agreements.

While the immediate agreement to halt attacks on energy infrastructure provides some short-term relief, analysts believe it could have a longer-term impact on Russian oil production. Western sanctions have significantly curtailed Russia’s ability to export oil, but a potential broader ceasefire might lead to the easing of these sanctions, potentially restoring some of the lost supply and further pressuring global oil prices. The ongoing supply glut concerns are exacerbated by Russia's continued involvement in the Ukraine conflict and the uncertainty surrounding the global oil market’s ability to balance production and demand in the coming months.

Adding to the market complexity is the latest data from the American Petroleum Institute (API), which painted a mixed picture for US crude inventories. According to API figures released on Tuesday, US crude oil stockpiles rose by 4.593 million barrels for the week ending March 14. While the increase in crude inventories could signal a cooling of demand, the drop in gasoline and distillate inventories—down by 1.71 million barrels and 2.15 million barrels, respectively—suggests a shift in the market dynamics. This divergence in stockpile changes adds to the uncertainty surrounding oil price direction and reflects the mixed signals from supply and demand forces.

On the geopolitical front, tensions in the Middle East continue to support oil prices, albeit in a more muted manner. The violence in key oil-producing regions, particularly around Yemen, has kept market participants on edge regarding potential supply disruptions. President Trump reaffirmed the US administration’s commitment to taking military action against Yemen’s Houthi rebels, citing the threat they pose to global oil supply routes in the Red Sea. Furthermore, Trump warned that Iran would be held accountable for any actions that disrupt shipping in this crucial waterway.

Meanwhile, the situation in Gaza remains tense, with Israeli airstrikes targeting Hamas positions, effectively ending a week-long ceasefire. The strikes resulted in significant casualties, including at least 200 deaths, according to Palestinian health authorities. While this conflict does not directly impact oil supply, the broader geopolitical instability it represents adds to the market’s wariness over the potential for more widespread disruptions in the Middle East, further supporting oil prices.

Technical Analysis

From a technical perspective, WTI oil’s price action shows a bearish pattern, adding to the growing concerns that the market may be in for further declines. The price has retested the upper boundary of its descending channel, only to reject the boundary and form a bearish engulfing candlestick pattern. This suggests that bears are firmly in control of the market, and traders are positioning themselves for further downside. The price remains below both the 50-period and 200-period exponential moving averages (EMAs), which is a clear indication of persistent bearish momentum.

Should the price break below the support level at $65.80, the next potential downside target could be the 100% Fibonacci extension level at $64.00. This suggests that WTI crude could experience additional downside pressure, as market sentiment continues to favor selling amid concerns over global supply dynamics.

However, despite the prevailing bearish trend, there are some signs of a potential reversal in the shorter term. The Stochastic indicator has reached oversold levels, suggesting a positive divergence with the price action. This divergence could signal a potential shift in momentum, offering a glimmer of hope for a near-term rebound, particularly if traders begin to re-enter the market on oversold conditions.

On the flip side, if WTI prices manage to close above $68.40 and break through the upper boundary of the descending channel, there could be a shift in market structure. In this scenario, a more neutral or sideways price action could unfold, possibly setting the stage for a retest of the next key resistance level at $70 per barrel.

TRADE RECOMMENDATION

SELL WTI

ENTRY PRICE: 66.60

STOP LOSS: 68.50

TAKE PROFIT: 64.00

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