Why has WTI slumped to near $87.50 as US inventories surge and geopolitical risks remain in focus?

• WTI retreats towards $87.50 during early Asian trade on Friday.
• A deal with Iran is unnecessary for the US, Trump says.
• Global oil flows face a threat as attacks on Saudi energy infrastructure intensify.

Rising US crude inventories are weighing on West Texas Intermediate (WTI), with the US crude oil benchmark losing momentum and trading around $87.50 in Friday’s early Asian session.

Oversupply concerns have deepened following a steep increase in US crude oil inventories last week. Data from the Energy Information Administration (EIA) showed that stockpiles rose by 9 million barrels in the week ending 5 November, against market expectations of a 1 million-barrel drawdown. The previous week had recorded a decline of 5.267 barrels.

According to CNBC, US President Donald Trump said on Thursday that Washington should stop pursuing an agreement with Iran. In a post on Truth Social, Trump wrote: “We don’t need a deal with Iran. Those days have long since passed,”

Concerns that an end to the US-Iran war remained out of sight grew following Trump’s comments. He made the remarks just over a week after Republicans sustained heavy losses in the US midterm election. Vance and other Republicans have attributed those losses to the Iran war, launched by the US and Israel in late February.

Global oil flows faced threats from shipping disruptions in the Strait of Hormuz, alongside an escalation in attacks on Saudi energy infrastructure.

Yemen’s Iran-aligned Houthis claimed attacks on three targets: a pumping station on the Saudi East-West oil pipeline, an oil facility in Yanbu, the Saudi Red Sea city, and an Aramco building in Riyadh, the capital.

Separately, Iran’s military said on Thursday that explosions had struck four oil tankers in the Strait of Hormuz after the vessels disregarded warnings.

Are rising Strait of Hormuz tensions supporting Brent?

Support for Brent has emerged from renewed tensions in the Strait of Hormuz, according to analysts at Commerzbank Research. They report that "tensions in the Strait of Hormuz escalated overnight," while Iran’s IRGC Navy claimed that "two additional oil tankers struck mines while attempting to transit the waterway, with both vessels reportedly on fire." Describing the price response, Commerzbank notes that "Brent crude rose 1.2% to USD92.63, as the latest Hormuz mine incidents provided a floor to prices despite the broader November slide of approximately 17%."

Technical Analysis: Will WTI remain range-bound in the near term?

WTI US Oil retains a neutral-to-range-bound near-term bias on the daily chart. Prices are holding marginally above the 100-day simple moving average (SMA), but remain significantly below the Bollinger Bands’ 20-day SMA centre line, which limits upside potential. Broader consolidation is supported by the lower Bollinger band at $82.30. Meanwhile, a Relative Strength Index (RSI) reading of 40.6, below the 50 threshold, suggests modest bearish momentum rather than a decisive break in the trend.

Immediate support lies at the 100-day SMA of $87.00. Below that, the lower Bollinger band near $82.30 provides a more significant structural floor, where buyers would likely seek to protect the broader uptrend against a deeper correction. On the upside, the Bollinger 20-day SMA centre band near $94.60 offers the first resistance, followed by a stronger hurdle at the upper Bollinger band of $106.85.

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