WTI crude slides below $92 as supply glut offsets truce optimism

WTI crude fell below $92 a barrel Thursday, breaching a key technical support level, as strong US production and a month-old truce with Iran erased the war premium that had pushed prices above $100 in April.

"The market is recalibrating to a world where the Strait of Hormuz risk is no longer priced in, and US supply is filling the gap," said Omar Tariq, commodities analyst at Edgen. "WTI below $92 tells you the geopolitical bid is gone."

WTI traded at $91.99 on the 2-hour chart after breaking below the blue channel floor near $96.05 and the 50-period moving average at $98.14, according to Trading Economics data. Brent crude held at $95.01, testing the lower boundary of its April uptrend channel, while natural gas steadied at $2.995 with the RSI pushing above 55, showing bullish momentum. The moves come more than eight weeks after the US-Iran ceasefire framework took effect April 8, during which time tanker traffic through the Strait of Hormuz has gradually resumed.

The decline matters because crude above $100 had been feeding into broader inflation expectations and energy-sector earnings. With WTI now below $92, the risk is that further downside — toward the $89.96-to-$88.55 Fibonacci extension zone — could pressure US shale producers' breakevens and force OPEC+ to reconsider its production strategy when it meets next. "If WTI holds below $90, OPEC+ will have to decide whether to cut deeper or accept lower prices," Tariq said.

Supply Glut Builds as US Production Hits Records

US crude output has remained strong through May, with weekly production estimates holding near record levels above 13 million barrels a day, according to EIA data. The Permian Basin alone has added roughly 300,000 barrels a day of new capacity since January, pushing total US production past the 13.4 million barrel mark in late April. That supply, combined with continued compliance from OPEC+ members and rising output from Brazil, Guyana, and Canada, has kept global inventories well supplied even as Iranian barrels remain largely offline.

The supply picture contrasts sharply with demand. Asian buying has picked up modestly — Japan's Idemitsu Maru became the first tanker to complete a Strait of Hormuz transit and reach its home port in April — but higher interest rates have subdued emerging-market consumption, leaving the market without a strong demand-side catalyst. The EIA's next weekly inventory report, due Wednesday, will be closely watched for confirmation of the build trend. Analysts surveyed by Reuters expect a 1.5 million barrel increase in crude stocks for the week ended May 23.

Natural Gas Holds Above $3 as Momentum Builds

Natural gas futures have held above the $2.95 support level, with the RSI pushing above 55 and volume supporting the bullish move. The contract is targeting the $3.008-to-$3.066 Fibonacci extension area as the next resistance zone, according to chart analysis. Ample storage on both sides of the Atlantic has capped upside — US inventories stand 12% above the five-year average, according to EIA data — but longer-term Asian and European demand remains relatively strong, providing a floor under prices. The NYMEX contract's ability to hold the white trend line from the May lows suggests buyers are stepping in at current levels.

Truce Holds, But Fragility Remains

The US-Iran ceasefire, now in its eighth week, has held despite periodic accusations of violations. Iran's foreign ministry accused the US of a "gross violation" of the truce after American forces struck missile sites in southern Iran on Monday, though both sides have continued talks in Doha. US Secretary of State Marco Rubio said Tuesday that a deal to reopen the Strait of Hormuz "will take a few days," while also insisting the waterway "has to be open one way or the other." The diplomatic track remains the single biggest variable for oil markets: any setback could quickly reintroduce the volatility that the truce has suppressed, while a final agreement would remove the last remaining risk premium from crude prices.

This article is for informational purposes only and does not constitute investment advice.