- Crude oil slipped 4% lower earlier this week and currently trades near the $59 per barrel area after IEA has sounded alarm bells that the oil market is increasingly getting more imbalanced, primarily due to its consistent oversupply and faltered demand conditions.
- Even though, the agency raised both demand and supply outlook for 2026, oversupply fears appear to have preliminarily won the battle, pressing the commodity closer to 3-week lows.
- Demand was upwardly revised to 788k per day for this year and 770k per day for 2026, yet supply of crude into the global market is seen growing faster. More specifically, by 3.1m barrels per day in the remainder of 2025 and by 2.5m barrels per day for 2026 respectively.
- Putting all these forecasts together and summarizing their impact, this data from IEA implies surpluses of 2.4m barrels per day for this year and 4m barrels per day for 2026, leaving no other choice but to adopt a bearish stance for WTI’s future
- OPEC on the other hand showcased that oil supply is expected to match demand in 2026 due to production increases by OPEC+, revising its prior projection which pointed at a deficit.
Technical Analysis of Oil
WTI Chart – Crude futures remain rangebound near the $59 per barrel area due to absence of volatility
- Resistance: 61.50 (R1), 65.60 (R2), 70.40 (R3)
- Support: 58.00 (S1), 55.15 (S2), 52.00 (S3)
Crude futures remained confined, since last week, between the $61.50 (R1) and $58.00 (S1) levels this week and yesterday signs of strength from the bears were observed, possibly foretelling that a move towards the downside may materialize with strong enough momentum. Nevertheless, we maintain our sideways bias for the commodity given the lack of volatility and participation, yet we do raise awareness for a possible breakdown below the closest support level, should the bears’ conviction strengthen. The RSI value of 43 tilts the scale in favour of a bearish scenario, alongside the bearish crossover of the MACD with the signal line. However, ADX has merely rose above the 20 threshold, currently registering a value of 22, with the -DI pulling away from +DI, signalling the weak momentum lies with the bears. Should the bears take full control we would reasonably expect to see WTI breaking definitively below the $58.00 (S1) level and head closer to the $55.15 (S2) support base. Should on the other hand the bulls resist and takeover the initiative, we may see crude break above the $61.50 (R1) resistance ceiling and head for the $65.60 (R2) resistance area.
