WTI futures on NYMEX recovered early losses and traded around $90 during the European session on Wednesday. Prices moved higher after The Washington Post reported that the US administration plans to deploy thousands of additional troops to the Middle East in the coming days.
The oil price outlook remained uncertain amid reports that the US and Iran are preparing to return to Pakistan for another round of talks towards a permanent ceasefire. US President Donald Trump told ABC News he saw no need to extend the two-week ceasefire and expected a possible announcement within the next two days.
At the time of writing, WTI was trading near $90, but stayed below the 20-day Exponential Moving Average at $92.36. The Relative Strength Index (14) was near 49.
The 20-day EMA at $92.36 is the first resistance level. If the price fails to move above it, traders may look towards prior swing lows around $84.00.
The technical analysis in the report was produced with the help of an AI tool.
We remember the market whip-sawing around the $90 mark this time in 2025. The conflicting headlines about US troop movements versus ceasefire talks with Iran created significant uncertainty for oil prices. That period highlights how sensitive the market is to geopolitical news, even when technical indicators suggest weakness.
Today, the situation has evolved, with prices having cooled considerably from those highs. OPEC+ has maintained its production discipline through the first quarter of 2026, but recent data from the Energy Information Administration (EIA) shows a consistent build in US crude inventories over the past four weeks, totaling over 12 million barrels. This growing supply buffer provides a cushion against the kind of supply shocks we feared last year.
This change in fundamentals suggests a different approach to derivatives. With implied volatility on WTI options currently sitting near 18-month lows, buying protection or speculative positions is relatively cheap. We believe traders should consider purchasing long-dated put options to hedge against a further slide in prices driven by sluggish global demand forecasts for the second half of 2026.
The technical resistance that mattered last year at the 20-day EMA near $92 is now a distant memory, with current resistance forming around the $81 mark. Given the bearish inventory data, selling call spreads with a strike price above $83 could be a prudent strategy. This allows us to collect premium while defining our risk if geopolitical tensions were to unexpectedly flare up again.
