WTI posts modest gains above $81.50 as traders weigh US-Iran deadlock

West Texas Intermediate (WTI) crude oil prices saw slight gains, trading above $81.50, as traders considered the ongoing US-Iran standoff. The situation remains tense, with talks to reopen the Strait of Hormuz deadlocked. Lebanon experienced its deadliest day of fighting in months, as Israel targeted Tehran-backed Hezbollah. Iran's Deputy Foreign Minister Kazem Gharibabadi urged US President Donald Trump to accept defeat and stop delusions after Trump suggested declaring the Strait of Hormuz a "territory of the United States."

Iran's Foreign Minister Abbas Araghchi stated there were no ongoing negotiations between Tehran and Washington, adding that the US must agree to Iran's conditions for shipping to resume through the waterway. Meanwhile, Russia faces fuel shortages due to Ukraine's near-daily attacks on oil refineries. Traders anticipate the release of the American Petroleum Institute's (API) weekly crude oil report, due later on Tuesday.

The report may provide insights into demand levels, with a larger-than-expected inventory draw potentially indicating stronger demand and lifting WTI prices. Conversely, a bigger build than expected could signal weaker demand or excess supply, potentially undermining WTI prices. Commerzbank noted that both major forecasting agencies have become more cautious about near-term demand outlooks, with the IEA predicting a decrease of 1.6 million barrels per day, while OPEC still anticipates an increase of 580,000 barrels per day.

This divergence in demand assessments adds to the market's uncertainty. On the supply side, Commerzbank highlighted that oil supply from outside OPEC+ is expected to rise by 690,000 barrels per day, further influencing market balance. In the daily chart, WTI US Oil holds near the Bollinger middle band, with resistance at the 100-day SMA ($86.40) and support at the 20-day SMA/Bollinger midline ($81.60). A break below the support level could expose lower Bollinger band support near $73.10.