WTI rose above $65.00 on Wednesday, up over 1%, as US-Iran tensions added a risk premium. Price traded above the 50 EMA at $60.85 and the 200 EMA at $62.39, after a January low at $55.68.
The move reached about $65.64 and neared resistance at $66.25. The chart showed higher highs and higher lows since early January.
Geopolitical Risks And Trade Uncertainty
Markets focused on the risk that US-Iran nuclear talks could fail, which could disrupt flows through the Strait of Hormuz. Bloomberg reported President Trump is weighing a USMCA exit ahead of the 1 July mandatory review, which could raise tariffs on Canadian crude.
US data showed January NFP at 130K versus a 70K consensus. The unemployment rate eased to 4.3%.
The EIA reported a +8.53 million barrel crude stock build versus expectations for a -0.2 million barrel draw. The Stochastic Oscillator (14,5,5) was near 80, with resistance still around $66.25.
A close above $66.25 would point to $68.00 to $69.00, while failure could pull price towards $62.39. Attention also turned to the IEA natural gas storage report and OPEC’s outlook calling for lower demand in Q2.
Current Market Structure And Key Levels
The current market structure feels eerily similar to what we saw back in early 2025, where a strong geopolitical bid is fighting against bearish inventory data. WTI crude is finding support from tensions abroad, but the physical market here at home appears loose. This conflicting setup creates significant uncertainty for price action over the coming weeks.
We see the price currently holding firm above the 50-day Exponential Moving Average at $79.50, establishing a bullish posture since the start of the year. This technical strength mirrors the rally from the January lows last year. However, the advance is now testing a significant resistance zone around the $85.00 level, which has capped prices twice in the last quarter.
The primary driver of this strength is renewed naval friction in the South China Sea, fueling fears of a potential disruption to major shipping lanes. We know from recent energy security reports that over 30% of global maritime crude oil passes through this region, making any escalation a serious threat to supply chains. This geopolitical risk premium is keeping sellers on the sidelines for now.
Despite this, the fundamental picture is weak, as highlighted by yesterday’s Energy Information Administration (EIA) report. We saw a surprise inventory build of 7.2 million barrels, far exceeding the market’s expectation of a small draw and weighing on sentiment. This comes as U.S. crude production continues to run near record highs of 13.3 million barrels per day, a fact that simply cannot be ignored.
For derivative traders, this defines a clear range for placing bets. A sustained break above the $85.00 resistance could trigger a sharp move higher, making long-dated call options an attractive strategy to capture that upside. Conversely, a rejection from this level would suggest the inventory glut is winning out, pointing to a potential slide back towards the 50-day EMA support near $79.50.
Adding to the complexity, the most recent OPEC+ meeting concluded with the cartel opting to maintain current production quotas, providing a floor for prices but doing little to address the supply builds seen in North America. We are also watching for signs of weakening demand from Asia, as recent industrial production data from China came in softer than expected. The interplay between these global supply-and-demand factors will be critical to watch alongside the technical levels.
