WTI Crude's Technical and Geopolitical Crossroads: Assessing Rebound Potential Post-Selloff

The recent selloff in WTI crude oil has left traders grappling with critical questions: Is this a temporary correction, or the start of a deeper decline? Can technical support levels and geopolitical demand drivers sustain a rebound? This analysis delves into the technical valuation of WTI crude and the interplay of geopolitical risks to assess its trajectory.

Technical Valuation: A Bullish Trend Under Strain

The technical picture for WTI crude (June 2025 contract) is marked by a strongly bullish underlying trend, yet faces near-term risks from overbought conditions. Current prices hover around $67, with immediate support at $66.28—a level critical to sustaining the uptrend. Below this, the next key supports lie at $65.15 (weekly pivot) and $62.16 (monthly pivot). Resistance levels, however, are formidable: the $68.71 hurdle must be cleared to target $70.54, with $74.12 as a longer-term objective.

The 50-day moving average ($80.78) and 200-day moving average ($77.53) highlight the medium-term trend. While prices have dipped below both averages recently, a sustained close above the $68.50 200-day MA—a key resistance zone—could reignite momentum.

Overbought indicators, however, warrant caution. The RSI (70.75) and Williams %R (-9.00) signal extreme bullishness, raising the risk of a correction. A bearish divergence in the 1-hour RSI adds to this concern. Yet, the MACD (0.86) remains positive, underscoring bullish momentum. Traders must balance these signals: a rebound above $66.28 could sustain the trend, while a breach would invite further weakness.

Geopolitical Drivers: Tensions and Demand

Geopolitical dynamics are the wildcard. The Middle East conflict, particularly risks to the Strait of Hormuz, remain pivotal. A closure could send prices soaring toward $130, while a durable ceasefire could strip out geopolitical premiums, easing prices back toward fundamentals.

Meanwhile, OPEC+'s production decisions loom large. The cartel's plan to boost output by 411,000 bpd in Q3 2025 could cap gains unless supply disruptions offset this increase. On the demand side, Chinese crude imports—up 14% year-on-year in May—suggest improving consumption, a bullish underpin.

Investment Implications: Navigating the Crossroads

Bullish Case:
- Technical support at $66.28 holds, triggering a rebound toward $68.71.
- Geopolitical tensions ease, but supply fears from the Hormuz corridor linger, supporting prices.
- OPEC+ maintains production cuts amid strong Asian demand.

Bearish Risks:
- A breakdown below $66.28 invalidates the bullish trend, targeting $62.16 (monthly pivot).
- A full-scale Hormuz closure sparks panic, but also accelerates demand destruction.
- OPEC+ increases output aggressively, overwhelming market tightness.

Strategy:
- Long positions are viable above $66.28, with profit targets at $68.71 and $70.54.
- Stop-loss near $65.28 to protect against a breakdown.
- Monitor geopolitical headlines closely; a Hormuz closure would demand swift repositioning.

Conclusion

WTI crude sits at a pivotal juncture: technicals favor a rebound, but overbought conditions and geopolitical uncertainties cloud the path. Investors must remain nimble, balancing bullish momentum with prudent risk management. The $66.28–$68.50 zone is the battleground—its outcome will dictate whether crude soars to $74 or retreats toward $62. In this volatile environment, discipline and adaptability are paramount.

As always, markets reward those who see both the forest and the trees.