• Crude futures traversed closer to 4-month lows earlier this week as energy traders hold dearly to their oversupply projections, now that summer peak season has officially dried out.
  • Traders are now diverting their attention towards the upcoming OPEC+ meeting that is going to take place this weekend, and speculations see the cartel raising further its output quotas, fearing that the hikes would add more strain in an already oversupplied market.
  • In other news, demand across the US has weakened further over the past few weeks, falling to a six-month low and raised worries over the extension of the lacklustre, short-term consumption of Americans. Furthermore, producer demand is also dull, since the latest round of purchasing managers index in regards to manufacturing output fell below expectations, signalling temporary(?) fizzling in demand.
  • Finally, adding more pressure were the IEA’s projections for 2026, forecasting record surpluses, while whereas, TotalEnergies, the energy company hailing from France, flagged a Q1 glut. 

Technical Analysis of Oil

Crude futures move closer to 4 month lows on oversupply pressures

wti/usd chart displaying a bullish trend with upward movement indicated by green lines and arrows.
  • Resistance: 65.60 (R1), 68.70 (R2), 72.50 (R3)
  • Support: 61.50 (S1), 58.00 (S2), 55.15 (S3)

Crude futures are currently fluctuating near the $61.50 (S1) support base, approaching a 4-month low as bearish sentiment prevailed in the past week. Given the lack of substantial fundamental catalysts, we maintain our bias for the prolongment of the sideways scenario for the time being, up until the point where a decisive move occurs. Even though, the RSI reading indicating that the bears are in control and are pushing prices lower, the lack of sufficiently strong enough momentum is not yet present.

We have to note nonetheless, that the MACD after failing to cross the threshold line, has once again retraced its steps and contracted further indicating that an extension of the move to the south maybe imminent. In the scenario where, the bulls awaken and safeguard WTI’s price from crossing decisively below the $61 per barrel area, then a move towards the $65.60 (R1) resistance barrier may be expected.

On the contrary, should the bears unite their power and definitively dragging WTI below the $61.50 (S1) support base, then an extension of the move towards the $58.00 (S2) support level shall be reasonably expected.