On Monday, the US benchmark WTI crude oil remained steady-to-better after bouncing back from an earlier decline. This can be attributed to a small decrease in the value of the US Dollar, suggesting the potential for increased purchases from foreign buyers.
At 11:04 GMT, WTI Oil is trading $70.24, up $0.18 or +0.26%. On Friday, the United States Oil Fund ETF (USO) settled at $62.04, down $1.21 or -1.91%.
Steady Oil Prices Amid Supply Concerns
Oil prices remained steady on Monday due to positive market sentiment resulting from reduced oil supplies due to OPEC+ cuts and the US resuming purchases for strategic reserves. However, concerns about fuel demand from the United States and China persist.
Prices Decline Amid Economic Concerns
Both benchmark crude oil prices experienced a fourth consecutive week of decline, driven by worries about a potential economic downturn in the US due to the risk of a significant default in June. The reopening process in China and the US’s economic growth slowdown also contribute to lukewarm market sentiment.
Possible Tightening of Global Oil Supplies
Nevertheless, there is a possibility of global crude oil supplies tightening in the second half of the year as OPEC+ implements additional production cuts, particularly targeting sour crude oil. Iraq does not expect further cuts during the next OPEC+ meeting.
US Considers Restocking Petroleum Reserve
Energy Secretary Jennifer Granholm mentioned the US’s consideration of repurchasing oil for the Strategic Petroleum Reserve after completing a mandated sale.
G7 Targets Russia’s Energy Production
Furthermore, the G7 leaders may announce new measures during their meetings to address sanctions evasion involving third countries. These measures aim to hinder Russia’s energy production and restrict trade supporting the Russian military.
WTI Oil is trading on the weakside of $72.57 (S1), making it new resistance. A sustained move under this level will indicate the selling pressure is getting stronger. If this creates enough downside momentum then look for the selling to possibly extend into $68.49 (S2) over the near-term.
Overtaking, $72.57 (S1) will signal the return of buyers. If this move can generate enough upside momentum then look for the market to evenually reach the major pivot at $78.02.
Resistance & Support Levels