A sharp surge in US crude oil inventories and optimistic expectations surrounding Iran negotiations caused crude oil prices to break below the trend line.
2026-02-27 00:53:30
On Thursday (February 26), during the US trading session, West Texas Intermediate (WTI) crude oil futures fell sharply, breaking below the two-month trendline at $65.27.
The factors that triggered this decline were: a huge increase in U.S. crude oil inventories and positive market expectations for the U.S.-Iran talks held in Geneva that day.
At 00:37 Beijing time, April WTI crude oil futures were trading at $64.27, up 1.3%.
Technical Analysis
(WTI crude oil daily chart source: FX678)
Although the main trend of crude oil is still upward according to the daily chart and moving averages, the overall trend has weakened significantly as the trendline support has been breached.
The short-term trading range is $61.76–$67.28, and the current price is near the 50% retracement level of that range at $64.52.
The next major trading range is $58.40–$67.28. If selling pressure persists, prices could fall further to the key pivot point of $62.84.
If the price falls below $61.76, the swing chart trend will turn downward.
However, the market is still expected to find support at the following levels:
200-day moving average: $62.61
50-day moving average: $61.26
These moving averages correspond to support levels created by geopolitical supply disruptions. As long as this support holds, it means that the war risk premium brought about by the situation in the Middle East still exists.
If prices fall below the moving average support, it can be assumed that the war premium has largely disappeared, and the market will then be dominated by concerns about massive global supply again.
Oil prices were pressured by a surge of 16 million barrels in inventories and increased Saudi production.
From a fundamental perspective, traders are reacting to Wednesday's weekly inventory report from the U.S. Energy Information Administration (EIA): the report showed that U.S. crude oil inventories surged by 16 million barrels, the largest weekly increase in three years.
Another factor affecting supply comes from Saudi Arabia: According to Reuters sources, Saudi Arabia has increased its crude oil production and exports as a contingency plan in response to a possible US strike on Iran that could disrupt Middle Eastern supplies.
The report also indicated that as long as oil prices remain at a suitable level, OPEC+ will likely consider increasing production by 137,000 barrels per day in April to meet peak summer demand.
Geneva talks change market narrative: oil prices shift from targeting $70 to digesting a $10 risk premium.
Within just one week, the market environment surrounding the US-Iran negotiations has changed, and traders are beginning to focus on downside risks.
At the beginning of this week, the market was still expecting oil prices to reach $70; now, the market generally believes that if the Geneva talks achieve constructive results, the geopolitical risk premium of about $10 per barrel may be gradually absorbed.
The trendline breakout sent a strong signal, but the war premium has not yet disappeared.
Looking ahead:
The break below the trendline has sent a clear signal to traders that oversupply is a major concern, while also suggesting that the market is optimistic about the outcome of the US-Iran negotiations.
However, as long as the moving average support remains effective, the risk premium will still exist, albeit weakened compared to before.
The factors that triggered this decline were: a huge increase in U.S. crude oil inventories and positive market expectations for the U.S.-Iran talks held in Geneva that day.
At 00:37 Beijing time, April WTI crude oil futures were trading at $64.27, up 1.3%.
Technical Analysis
(WTI crude oil daily chart source: FX678)
Although the main trend of crude oil is still upward according to the daily chart and moving averages, the overall trend has weakened significantly as the trendline support has been breached.
The short-term trading range is $61.76–$67.28, and the current price is near the 50% retracement level of that range at $64.52.
The next major trading range is $58.40–$67.28. If selling pressure persists, prices could fall further to the key pivot point of $62.84.
If the price falls below $61.76, the swing chart trend will turn downward.
However, the market is still expected to find support at the following levels:
200-day moving average: $62.61
50-day moving average: $61.26
These moving averages correspond to support levels created by geopolitical supply disruptions. As long as this support holds, it means that the war risk premium brought about by the situation in the Middle East still exists.
If prices fall below the moving average support, it can be assumed that the war premium has largely disappeared, and the market will then be dominated by concerns about massive global supply again.
Oil prices were pressured by a surge of 16 million barrels in inventories and increased Saudi production.
From a fundamental perspective, traders are reacting to Wednesday's weekly inventory report from the U.S. Energy Information Administration (EIA): the report showed that U.S. crude oil inventories surged by 16 million barrels, the largest weekly increase in three years.
Another factor affecting supply comes from Saudi Arabia: According to Reuters sources, Saudi Arabia has increased its crude oil production and exports as a contingency plan in response to a possible US strike on Iran that could disrupt Middle Eastern supplies.
The report also indicated that as long as oil prices remain at a suitable level, OPEC+ will likely consider increasing production by 137,000 barrels per day in April to meet peak summer demand.
Geneva talks change market narrative: oil prices shift from targeting $70 to digesting a $10 risk premium.
Within just one week, the market environment surrounding the US-Iran negotiations has changed, and traders are beginning to focus on downside risks.
At the beginning of this week, the market was still expecting oil prices to reach $70; now, the market generally believes that if the Geneva talks achieve constructive results, the geopolitical risk premium of about $10 per barrel may be gradually absorbed.
The trendline breakout sent a strong signal, but the war premium has not yet disappeared.
Looking ahead:
The break below the trendline has sent a clear signal to traders that oversupply is a major concern, while also suggesting that the market is optimistic about the outcome of the US-Iran negotiations.
However, as long as the moving average support remains effective, the risk premium will still exist, albeit weakened compared to before.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
