The crude oil market has entered a fragile and uncertain phase, with prices retreating from recent highs. While WTI crude is still holding above the critical $65 mark on a closing basis, it was below this handle at the time of writing. So, the overall tone remains cautious, with a bearish tilt expected to persist in the near term.
Technical Outlook: WTI Breaks Key Support
The WTI crude chart shows a breakdown of a short-term bullish trend line, and lower lows. The price failed to reclaim the 200-day moving average and found strong resistance since. Currently, it is testing support around $65.00. A daily close below this level could trigger further bearish momentum, with the next support zones seen at $64, and then the next round handles below that. $60 per barrel could be reached if the macro backdrop doesn't improve.
Geopolitical Factors: Trump’s Tariff Threats Dismissed
Donald Trump’s threats of 100% tariffs on countries buying Russian oil sparked initial concern but were ultimately shrugged off by the market. Traders interpreted the 50-day delay in enforcement and Trump’s historical pattern of backing off such threats as signs that immediate supply disruptions were unlikely.
OPEC+ Strategy: Supply Returning to the Market
OPEC+ has announced a larger-than-expected production increase of 548,000 bpd for August, with another 550,000 bpd potentially coming in September. This roll-back of earlier voluntary cuts aims to recapture market share, especially as U.S. shale production slows. However, the added supply may cap price gains, particularly as demand is expected to ease after the peak U.S. driving season.
By Fawad Razaqzada, Market Analyst with FOREX.com
Technical Outlook: WTI Breaks Key Support
The WTI crude chart shows a breakdown of a short-term bullish trend line, and lower lows. The price failed to reclaim the 200-day moving average and found strong resistance since. Currently, it is testing support around $65.00. A daily close below this level could trigger further bearish momentum, with the next support zones seen at $64, and then the next round handles below that. $60 per barrel could be reached if the macro backdrop doesn't improve.
Geopolitical Factors: Trump’s Tariff Threats Dismissed
Donald Trump’s threats of 100% tariffs on countries buying Russian oil sparked initial concern but were ultimately shrugged off by the market. Traders interpreted the 50-day delay in enforcement and Trump’s historical pattern of backing off such threats as signs that immediate supply disruptions were unlikely.
OPEC+ Strategy: Supply Returning to the Market
OPEC+ has announced a larger-than-expected production increase of 548,000 bpd for August, with another 550,000 bpd potentially coming in September. This roll-back of earlier voluntary cuts aims to recapture market share, especially as U.S. shale production slows. However, the added supply may cap price gains, particularly as demand is expected to ease after the peak U.S. driving season.
By Fawad Razaqzada, Market Analyst with FOREX.com
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.