WTI Crude Oil prices are rising due to attacks in the Red Sea. This increase occurred even though the US Energy Information Administration reported a jump in stockpiles by 7.07 million barrels, while analysts expected a drop of 2 million barrels. OPEC and its allies are set to boost production by 548,000 barrels per day starting in August. From April to July, OPEC+ increased production by 1.37 million barrels per day. Even with more oil coming to market, geopolitical tensions have kept prices from dropping significantly.

Houthi Attacks Affect the Market

Houthi rebels have attacked ships in the Red Sea, raising oil risk premiums. WTI Crude Oil is trading around $67.54, with notable support and resistance levels. The market indicators are mixed: the Relative Strength Index (RSI) is slightly above neutral, while the Commodity Channel Index (CCI) is slightly negative. These elements, along with rising inventories and increased OPEC+ output, create a complicated situation for crude oil prices. WTI oil is known for its high quality due to low gravity and sulfur content. Prices depend on factors like supply, demand, and geopolitical events. Despite stockpiles rising beyond expectations, prices have increased, suggesting emotional drivers are at play in the market. The EIA’s report of over 7 million barrels in stockpile growth—much higher than the anticipated decrease—may confuse traders relying solely on basic data. This pattern is familiar: when market sentiment shifts, inventory levels can be overlooked. OPEC+’s choice to raise output by another 548,000 barrels a day from August adds to the increasing supply. From April to July, their total output already grew by 1.37 million barrels daily. Normally, such an increase would lower prices, but that hasn’t happened, mainly due to non-numerical factors.

Geopolitical Tensions and Oil Prices

The rising tensions in the Red Sea have become a crucial factor. As the Houthi group attacks commercial vessels near Yemen, shipping routes are in jeopardy. This situation drives up insurance costs and delays transit times. Traders are pricing in these risks, which helps keep prices higher than they might otherwise be. Currently, WTI is around $67.54, a price that does not attract bargain hunters but is also not high enough to inspire confidence. It is trading closely between its technical support and resistance points. The technical indicators offer little guidance. The RSI sits just above neutral, while the CCI shows slight selling pressure but not enough for a strong market trend. This mixed picture requires careful consideration. While rising supply and growing inventories typically push prices down, ongoing conflict alters this expectation. One must recognize that market conditions are not driven by supply and demand alone; security issues are creating a protective buffer, preventing prices from falling. Instruments tracking oil prices—such as futures and options—may behave differently than usual in this environment. This situation does not favor a clear direction. Hedging strategies might need frequent adjustments, and short-term trades may be more profitable than long-term investments until shipping risks lessen. We should watch how shipping insurers assess new voyages and stay alert for updates from OPEC+ in the coming days. Any changes in sentiment or new maritime developments could significantly affect options premiums or implied volatility. With the RSI and CCI not aligned, relying solely on technical analysis could lead to mistakes. Market momentum is weak and uncertain. Expect more fluctuations than clear trends in the market ahead. In this environment, reactions often outweigh predictions. Create your live VT Markets account and start trading now.

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