As the XTI/USD chart shows, this morning (27 August) WTI crude oil is trading around the $63 level, although on Monday it climbed above $64.70. This means the price has retreated by approximately 2.8% from this week’s high.
The bearish momentum may be linked to the market’s reassessment of geopolitical risks. According to Reuters, US Special Representative Steve Witkoff stated that:
→ he will meet with a Ukrainian delegation in New York this week;
→ the US administration is also in talks with Russia, seeking to bring the war to an end.
He also noted that Washington is striving for de-escalation in the Middle East. We could assume that market participants are pricing in the possibility that these efforts could lead to the easing of sanctions and reduce risks and restrictions in global oil trade.
Technical Analysis of the XTI/USD Chart
On 19 August, we highlighted that:
→ the August downtrend remained intact, though it appeared to be weakening;
→ bulls might exploit this situation and attempt to launch an attack.
Indeed, since then the price rallied to a peak near $64.80, forming an upward trajectory shown by the orange lines. However, at the start of this week, momentum shifted back to the bears, as evidenced by a series of bearish signals on the chart:
→ Yesterday, bulls attempted to resume the upward trend from the lower orange boundary but failed – this was reflected in a candlestick with a long upper shadow, touching the $64 level before reversing downwards.
→ Bears then built on this success, pushing the price below $63.50 (where the lower orange line had been positioned).
→ This morning, WTI is trading close to weekly lows, highlighting the bulls’ inability to counter the pressure.
As a result, bears have driven the price back into the descending channel that has been in place since the start of the month. Given the above, we could assume that the market may continue to develop bearish dynamics within this downward channel – with WTI potentially heading towards the red median line.
The forthcoming oil inventory report (due today at 15:30 GMT+3) might have a significant influence on how the situation unfolds.
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