WTI Crude Oil Prices May Be Pricing in Recovery Too Soon

The recent disruption in the Strait of Hormuz has led to a stabilization in WTI crude oil prices, but analysts question whether the market has priced in too much recovery.

Traders are weighing the pace of recovery in the strait, where about 20% of global oil consumption passes through. Despite temporary disruptions earlier this month, futures have given back some of the geopolitical risk premium.

Technical charts show a pullback from the spike seen during the height of the Hormuz disruption, with prices hovering near the lower end of the recent trading range. The relative strength index (RSI) has moved back to neutral territory, suggesting that the immediate buying pressure has faded.