WTI plunges on immediate market reaction to Middle East ceasefire announcement

WTI oil prices declined sharply on Wednesday, dropping by around $18 in early Asian trading, following the announcement of a two-week ceasefire between the United States, Israel, and Iran, along with the partial reopening of the Strait of Hormuz, which helped ease supply concerns.

The agreement represents an initial step toward potential long-term stability in the region and temporarily alleviated fears of further escalation that could have driven oil prices higher and triggered broader economic repercussions, including rising inflation, higher interest rates, and a potential slowdown in global growth.

Despite the ceasefire remaining fragile, oil prices moved significantly lower in the immediate aftermath, reflecting a wave of optimism across the markets.

From a technical perspective, the daily chart has weakened notably following the sharp decline, which formed a large bearish candle—the biggest daily loss since March 9. Momentum indicators such as the 14-day momentum have turned negative, while RSI and Stochastic are trending lower, reinforcing the bearish outlook after the break below the psychological $100 level and the $98.00 area (Fibonacci 38.2% of $63.57/$119.44 and the 20-day moving average).

Sellers found temporary support around the $91.00 zone, after breaching the 50% retracement at $91.50, where the market is currently consolidating following the heavy decline earlier in the session.

Further consolidation may precede another move lower, assuming optimism continues to dominate sentiment. A sustained break below the $90 level would confirm the bearish signal and expose the next key support at $84.50, the March 23 higher low. A move below this level would complete a double-top formation on the daily chart and further weaken the near-term structure.

A daily close below the broken $98.10 support would be required to maintain bearish momentum and provide more favorable levels for re-entering short positions, while a return above and close above $100 would challenge the bearish outlook.

Res: 96.50; 98.10; 100.00; 101.93
Sup: 91.09; 90.00; 86.45; 84.50