WTI slides below $78.00 mark, rising Middle East tensions to limit deeper losses

• WTI moves away from a three-week high touched, though the bias seems tilted in favor of bulls.
• Geopolitical tensions in the Middle East could tighten access to global supplies and lend support.
• Dovish Fed expectations continue to undermine the USD and should contribute to limiting losses.

West Texas Intermediate (WTI) US crude Oil prices tick lower during the Asian session on Tuesday and for now, seem to have snapped a four-day winning streak to a three-week top, around the $78.75-$78.80 area touched the previous day. The commodity currently trades just below the $78.00 mark, down nearly 0.50% for the day, though any meaningful downside seems elusive in the wake of rising Middle East tensions.

Israeli forces continued their operations near the southern Gaza city of Khan Younis on Monday and are preparing for some sort of retaliatory attacks by Iran, and its allies, amid the risk of a broader conflict in the Middle East. Moreover, the subsequent Israeli response could lead to a full-blown war in the key Oil producing region and disrupt global crude supplies. This, in turn, should continue to act as a tailwind for the black liquid and help limit losses.

Furthermore, market players seem convinced that the Federal Reserve (Fed) will start its rate-cutting cycle in September, which is expected to lift economic activity and boost fuel demand. Apart from this, subdued US Dollar (USD) price action might turn out to be another factor lending support to the USD-denominated commodity. The USD bears, however, seem reluctant ahead of the release of the crucial US inflation figures on Tuesday and Wednesday. 

In the meantime, Tuesday's downtick could be attributed to some technical selling following the overnight failure near the 50-day Simple Moving Average (SMA) resistance. Nevertheless, the aforementioned supportive fundamental backdrop supports prospects for an extension of the recent goodish recovery move from the $71.20-$71.15 region, or a multi-month low touched last week. Hence, any meaningful dip might still be seen as a buying opportunity.