WTI trades weakly below $85 on US-Iran deal hopes

West Texas Intermediate (WTI) oil prices have recently experienced a decline, trading slightly below $85.00 during the Asian trading session on Tuesday. This marks the oil price near its 10-week low of $84.25, which was recorded on Monday. Analysts at MUFG attribute the downward pressure on oil prices to hopes for a potential agreement between the United States and Iran.

President Trump's recent statements on CNN have further boosted investor confidence, as he stated that it is "highly unlikely" he would need to order military strikes on Iran if negotiations progress. The bank emphasizes that Trump's remarks lie on the condition that a "very strong agreement" is reached, deeming it crucial for maintaining the recent decline in geopolitical risk premia.

Oil prices have been under significant stress following the US midterm elections, where Democrats gained control of both the House and the Senate. This electoral outcome has increased expectations that Democrats will limit funding for military actions against Iran. Senate Minority Leader Chuck Schumer (D-N.Y.) recently stated that the United States "is going to end the war."

Technical analysis shows that WTI US Oil is trading at $84.81, with the near-term bias remaining bearish as the price holds well beneath the 20-day Exponential Moving Average (EMA) at $93.36. Additionally, a lower low formation after breaking the October 6 low at $86.32 supports a bearish bias. The Relative Strength Index (RSI) at 34 is slightly above the oversold territory, indicating ongoing downside momentum, though the speed of the decline may slow if selling pressure subsides.

Key support levels include August 28 high at $83.11 and August 26 low at $79.28. WTI Oil, also known as "light" and "sweet" crude, is a benchmark for the oil market sourced in the United States and distributed via the Cushing hub.