WTI slips below $85.00 as hopes of Ukraine peace talks and oversupply concerns weigh

• At around $84.75, WTI is losing ground in early European trading on Thursday.
• Two days of peace talks in Abu Dhabi produced an agreement between Russia and Ukraine on a major prisoner exchange.
• A 9 million-barrel increase in crude oil inventories was recorded in the week ended 5 November, according to API.

Around $84.75 is the level at which West Texas Intermediate (WTI), the US crude oil benchmark, is changing hands early in Thursday’s European session. Rising US inventories are weighing on WTI, alongside hopes of progress in peace negotiations concerning the Middle East and Russia-Ukraine.

An agreement on a major prisoner exchange emerged from two days of talks between Russian and Ukrainian negotiators in Abu Dhabi, Reuters reported. The discussions ended on Wednesday, although US mediators said substantial differences remained on central issues, notably territory. Ukraine’s President Volodymyr Zelensky voiced hopes of securing tangible results towards resolving the war this year.

Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities, said: "Markets are falling on expectations that behind-the-scenes efforts are underway to secure a ceasefire between Russia and Ukraine and that it is unlikely the Iran war will escalate ahead of the US-China summit next week,"

Kikukawa also said: "However, given the uncertainty surrounding the Strait of Hormuz, the markets are unlikely to suffer a significant collapse,"

A 9 million-barrel rise in US crude stockpiles in the week ending 5 November heightened concerns about excess supply. The Energy Information Administration (EIA) reported the sharp build, following a decline of 5.267 barrels the week before. A drawdown of 1 million barrels had been the market consensus.

Oil remains volatile amid uncertainty over US-Iran diplomacy

In Commerzbank analysts’ assessment, oil markets "remain volatile as investors assess whether the Democrats' control of Congress could accelerate diplomatic efforts to end the US-Iran conflict." The analysts also observe that "reports that Iran is reviewing proposals concerning its nuclear programme offered some encouragement, although no comprehensive agreement has been announced and risks to Gulf shipping remain." In this setting, the bank notes that "Brent crude oil prices rose 5% to USD99.33."

Technical Analysis: WTI stays bearish below the 100-day SMA

Below both its key moving averages and the Bollinger Bands’ middle line, WTI US Oil remains in a corrective phase on the daily chart, leaving the short-term outlook bearish. The 100-day simple moving average (SMA) is limiting advances, while initial protection against further declines comes from the lower Bollinger Band. At around 34, the Relative Strength Index (14) is hovering in oversold territory. This suggests that downward momentum is easing, but does not yet signal a bullish reversal.

The 100-day SMA at $86.80 provides the nearest resistance, followed by the middle Bollinger Band at approximately $94.95. Should a stronger recovery develop, the upper band at $107.45 would present a more distant hurdle. Initial support, meanwhile, lies around $82.45 at the lower Bollinger Band. A decisive move below that level would strengthen the bearish outlook and leave scope for further losses over the coming sessions.

(The technical analysis of this story was written with the help of an AI tool. Know more.)