WTI slipped in Asian trading on Thursday to just below $79.00, down over 1% on the day, yet it stayed close to an over one-month high reached earlier in the week. The move came as the market awaited further developments in the Middle East, where US-Iran hostilities have escalated since the start of the week, alongside reports of a US naval blockade of Iranian ports and the closure of the Strait of Hormuz.<\/p>\n\n
Technically, the latest advance pushed through the 23.6% Fibonacci retracement of the April\u2013July fall and the 200-day EMA, while the RSI (14) stood at 54.36 and the MACD at 1.85 after a rebound from the $67.07 cycle low. Support levels were cited at the 200-day EMA of $77.28 and the 23.6% retracement at $76.59, with resistance at the 38.2% level of $82.47 and the 50.0% retracement near $87.23. Above that, levels referenced were 61.8% at $91.98, followed by $98.75 and $107.38; a deeper pullback towards $67.07 would undermine the prevailing bias.<\/p>\n\n
Based on the current situation, we see the recent dip in WTI below $79.00 as a temporary pullback, not a change in trend. The escalating tensions between the US and Iran, especially after the latest naval encounters near the Strait of Hormuz, present a significant supply-side risk. Given that over 20% of the world’s oil passes through this chokepoint, any disruption could send prices sharply higher.<\/p>\n\n
This bullish outlook is reinforced by the latest supply data. The Energy Information Administration’s report yesterday showed a crude inventory draw of 4.5 million barrels, more than double the consensus forecast, pointing to robust demand. We also note that China\u2019s latest Caixin Manufacturing PMI reading came in at 51.9, signaling continued expansion and fuel consumption in the world\u2019s largest oil importer.<\/p>\n\n
From a trading perspective, we view any weakness toward the 200-day moving average around $77.30 as a buying opportunity. The technical breakout earlier this week remains valid, and momentum indicators are still positive. Therefore, traders could consider buying call options or bull call spreads to position for a move toward the initial resistance at $82.47.<\/p>\n\n
We believe that dips are for buying in this environment, with a strategy of adding to long positions in the coming weeks. For options traders, selling out-of-the-money puts below the $76.50 support level could be a way to collect premium while defining a favorable entry point. This strategy benefits from both a rising price and the heightened implied volatility from geopolitical risks.<\/p>\n\n
The main risk to this view would be a significant de-escalation in the Middle East or a sudden drop in demand. A decisive break below the $67.00 cycle low would invalidate our bullish thesis. Until then, we will treat pullbacks as opportunities to position for higher prices through the end of the summer.<\/p>\n\n\n\n