WTI climbed above $65.00 on Wednesday, rising more than 1%, as tensions between the US and Iran added a risk premium. Price moved above the 50 EMA at $60.85 and the 200 EMA at $62.39 after hitting a January low of $55.68.
The rally reached about $65.64 and approached resistance at $66.25. The chart has shown higher highs and higher lows since early January.
Geopolitical Risks And Trade Uncertainty
Markets are focused on the risk that US-Iran nuclear talks could collapse, which could disrupt oil flows through the Strait of Hormuz. Bloomberg also reported that President Trump is considering a USMCA exit ahead of the mandatory 1 July review. That move could raise tariffs on Canadian crude.
US data showed January NFP at 130K versus a 70K forecast. The unemployment rate slipped to 4.3%.
The EIA reported a crude inventory build of +8.53 million barrels, compared with expectations for a -0.2 million barrel draw. The Stochastic Oscillator (14,5,5) was near 80, and resistance remains around $66.25.
A close above $66.25 would open the way to $68.00 to $69.00. If price fails at resistance, it could fall back toward $62.39. Traders are also watching the IEA natural gas storage report and OPEC’s outlook, which calls for weaker demand in Q2.
Current Market Structure And Key Levels
The current setup looks similar to early 2025: strong geopolitical support is clashing with bearish inventory data. WTI is getting lifted by tensions overseas, but the US physical market looks well supplied. This mix adds uncertainty for price action in the weeks ahead.
Price is holding above the 50-day Exponential Moving Average at $79.50, keeping the tone bullish since the start of the year. This strength echoes last year’s rebound from the January lows. However, the move is now testing a major resistance area near $85.00, which has stopped rallies twice in the last quarter.
The main driver behind recent strength is renewed naval friction in the South China Sea, which is raising fears of disruption to key shipping routes. Recent energy security reports suggest more than 30% of global seaborne crude moves through this region. Any escalation could threaten supply chains, keeping sellers cautious for now.
Even so, the fundamentals remain weak, as shown by the latest EIA report. Inventories rose by 7.2 million barrels, far above expectations for a small draw, which weighed on sentiment. At the same time, US crude production is still near record highs around 13.3 million barrels per day.
For derivatives traders, this sets a clear range. A sustained break above $85.00 could drive a sharper move higher, making long-dated call options a potential way to target that upside. If price gets rejected at $85.00, it would suggest inventories are taking control, with risk of a move back toward 50-day EMA support near $79.50.
Adding another layer, the latest OPEC+ meeting ended with the group keeping current production quotas. That may help put a floor under prices, but it does little to address the supply builds in North America. Demand signals from Asia also matter, especially after softer-than-expected industrial production data from China. How these supply-and-demand forces interact will be key, alongside the technical levels.
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