WTI Oil Price Forecast: corrects lower after reaching overbought levels
West Texas Intermediate (WTI) Oil comes under heavy selling pressure on Friday as traders lock in profits following a sharp rally that pushed the US benchmark to its highest level since May 21. At the time of writing, WTI trades around $96.50, down roughly 4% on the day.
West Texas Intermediate (WTI) Oil experienced a significant sell-off on Friday after reaching overbought levels, with the US benchmark settling around $96.50, marking a 4% decline for the day. Despite the pullback, WTI is set to achieve consecutive weekly gains as geopolitical risks persist, particularly the ongoing war in the Middle East.
Shipping through the Strait of Hormuz remains limited, with only seven vessels crossing the waterway on Thursday, down from 11 on Wednesday, indicating a stark contrast to the recent 10-day average of 15 vessels. Foreign ministers from Iran and Gulf countries are reportedly preparing to meet in Oman to discuss a temporary arrangement for managing shipping through the Strait of Hormuz.
Technical indicators show WTI maintains a bullish bias, with price staying well above key Simple Moving Averages (SMAs) and momentum favoring buyers. Momentum is supported by a Relative Strength Index (RSI) near 66, indicating overbought conditions but not yet in extreme territory. Meanwhile, the Moving Average Convergence Divergence (MACD) stays positive, reinforcing the upside potential.
Resistance levels are identified at $100.00 and $105.00, while a break below these levels could expose the March high near $113.28. Conversely, support is found at the $90.00-$92.00 region, followed by the 100-day SMA at $85.00, 50-day SMA at $82.00, and 200-day SMA at $78.00. These technical levels could provide additional support if the price continues to decline.
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