The rally yesterday was largely driven by Russian supply fears as Ukraine struck Russian energy infrastructure. Add to this the rhetoric by President Donald Trump in which he adopted a rather pessimistic tone regarding a Russia/Ukraine peace deal and the perfect conditions were created for a short-term rally.
US President Donald Trump has again threatened to impose sanctions on Russia if a peace deal isn't made in the next two weeks.
However, sources have told Reuters that U.S. and Russian officials have been discussing energy deals on the side during recent peace talks about Ukraine.
This is in stark contrast to the US rhetoric against India over its continued purchases of Russian Oil. India remains the third largest buyer of Russian crude oil with a potential 50% tariff being levied by the US as a result.
Oil market Facing a Host of Challenges
Market participants are hesitant to make long-term commitments in the oil market. This is because there is so much uncertainty due to the conflict in Ukraine and the trade disputes.
There are still concerns around how tariffs and trade deals will impact Oil demand in Q3 and Q4 of 2025 and this could leave Oil prices in limbo with a lot of choppy price action for the foreseeable future.
US API Data Up Next
The American Petroleum Institute (API) will release its latest inventory data later today.
This comes after the API reported that U.S. crude stocks fell by 2.4 million barrels two weeks ago, more than the expected 1.2 million-barrel drop, showing stronger demand. Official data from the U.S. Energy Information Administration (EIA) will be released tomorrow as well.
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Technical Analysis - WTI
From a technical analysis standpoint, Oil has retested the triangle pattern which it broke out of on August 6.
WTI is also back below the 100-day MA with a four-hour candle close below the MA taking place.
The four-hour candle closed with no wick to the downside, a sign of the momentum?
Oil has recorded a change in structure following the recent bullish rally and as long as price holds above the swing low at 62.50, bulls will remain hopeful of further upside potential.
Immediate resistance rests at the 65.00 handle before the 65.50 and 67.00 handles come back into focus.
A move lower from her will need to record a four-hour candle close below the 62.50 handle which could open up a retest of the August 20 lows around the 61.80 and potentially even lower.
WTI Oil Daily Chart, August 26, 2025
Source: TradingView (click to enlarge)
