WTI Stages Sharp Comeback as Middle East Supply Risks Intensify
December WTI crude oil futures are lower for the week, but the market has recovered a good portion of its early loss. The contract opened at $90.83, broke to $83.88, then rallied back to $88.20. At that price, WTI is down $2.63 for the week, or 2.90%. Traders took war premium out of crude after President Trump played down the possibility of new U.S. strikes on Iran. Higher Saudi production and a…
WTI crude oil futures experienced a significant rebound in December, as geopolitical tensions escalated in the Middle East. The contract opened at $90.83, briefly dipping to $83.88, before rebounding to $88.20, marking a 2.90% loss for the week. The market was initially driven by reduced war risk after President Trump downplayed the likelihood of additional U.S. strikes on Iran.
However, the supply disruptions caused by attacks on Saudi energy infrastructure and shipping concerns reignited buying interest. President Trump's comments further fueled uncertainty, but the recovery in Saudi production and rising U.S. inventories provided sellers with additional supply. The buildup of U.S. crude inventories, particularly gasoline stocks, helped maintain the rally.
Despite ongoing talks between Russia and Ukraine and continued drone attacks on Russian oil facilities, the market's focus remained on the potential impact on future supply. The critical level to watch is $90.34, as a sustained move above it could signal a return of buyers and a potential rally into the $94.44 to $96.93 range. Conversely, a move below $90.34 might indicate renewed selling pressure, potentially retracing to the $85.99 level.
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