WTI crude's technical structure is unequivocally bullish. Prices are trading above the 50-day moving average of $87.50/bbl, and the recent breakout above $90/bbl confirms the resumption of the uptrend initiated after the Hormuz disruption began in late February. The relative strength index (RSI) at 62 indicates room for further upside before reaching overbought territory.
The most telling technical signal is the deepening backwardation structure. The prompt WTI contract trades at a $4.50/bbl premium to the 12-month forward contract, the widest backwardation since the initial Hormuz shock. This structure signals that the market is willing to pay a significant premium for immediate delivery — a classic sign of physical tightness.
The Cushing, Oklahoma inventory level is a critical variable to monitor. Cushing inventories have fallen to approximately 28 million barrels, near the minimum operational levels required for pipeline and storage logistics. If Cushing inventories fall below 24 million barrels, the NYMEX delivery mechanism could face operational constraints that would amplify backwardation and potentially trigger a delivery squeeze.
On the downside, $85/bbl provides strong support as the prior resistance-turned-support level. A break below $85 would signal a potential trend change, but this would likely require a resolution to the Hormuz disruption or a significant demand-side shock such as a global recession. Neither scenario appears imminent in the current outlook.
Deep backwardation means rolling futures hedges forward carries a significant cost — approximately $4.50/bbl every three months. For physical procurement, consider term contracts with fixed pricing rather than hedging via futures rolls. The Cushing inventory risk demands close monitoring; allocation planning should assume potential forward-curve dislocations.