WTI recovers to near $95.50 amid Iran peace talk hopes

West Texas Intermediate (WTI) crude oil prices are climbing back towards $95.50 amid optimistic talks of ending the Iran conflict. After falling to a six-month low of $94.30 on Monday, WTI recovered to its current level as Iran reported ongoing discussions between the US and Iran to resolve their eight-month dispute. Iranian Foreign Minister Abbas Araqchi acknowledged the ongoing negotiations and emphasized the importance of political rationality in Washington, while Iranian President Masoud Pezeshkian expressed Iran's commitment to resolving issues through dialogue.

TD Securities' Ryan McKay noted that the prospect of a diplomatic breakthrough could have a significant impact on crude oil prices, as much of the recent market gains were risk premiums based on expectations of potential escalation. However, McKay cautioned that without concrete resolution to the conflict, a full erosion of the risk premium is unlikely.

Market participants are now watching for the release of the American Petroleum Institute (API) crude oil stockpile report, which could provide further insight into demand levels and influence WTI prices. The technical analysis indicates a bullish near-term bias for WTI, with the price holding above the 100-day simple moving average and near the upper half of the recent Bollinger envelope.

However, traders remain cautious, as headlines and hopes of diplomacy have already eroded some of the risk premium in crude oil markets.