Oil Prices Slide Under Trade and Inventory Pressures
WTI crude oil traded between a high of $68.34 and low of $64.11 before reaching $66.28 as of Thursday’s close, down $0.86 or -1.28%. The price action reflected competing fundamental forces: escalating geopolitical tensions that initially supported prices, followed by trade policy uncertainties and mixed inventory data that pressured the market lower.
Geopolitical Tensions Drive Early Week Strength
The period began with significant geopolitical risk as President Trump prepared statements on Russia with direct oil supply implications. Trump confirmed plans to send Patriot missile systems to Ukraine, while bipartisan Congressional momentum drove new sanctions legislation aimed at pressuring Russia into peace talks.
European Union diplomats neared consensus on an 18th round of sanctions targeting Russian crude, potentially with a lower price cap. Markets initially priced in supply constriction risks, providing early bullish support.
However, the geopolitical premium faded when Trump announced a 50-day deadline to end the Ukraine war. UBS analyst Giovanni Staunovo noted this delay reduced expectations of immediate market tightening, leading to a retreat from Monday’s three-week high of $69.65.
Iraq Supply Disruptions Provide Persistent Support
Iran-backed militias conducted drone attacks on Iraq’s Kurdistan region for four consecutive days, forcing production shutdowns at oilfields operated by Gulf Keystone, DNO, and Hunt Oil. Officials reported…
WTI crude oil traded between a high of $68.34 and low of $64.11 before reaching $66.28 as of Thursday’s close, down $0.86 or -1.28%. The price action reflected competing fundamental forces: escalating geopolitical tensions that initially supported prices, followed by trade policy uncertainties and mixed inventory data that pressured the market lower.
Geopolitical Tensions Drive Early Week Strength
The period began with significant geopolitical risk as President Trump prepared statements on Russia with direct oil supply implications. Trump confirmed plans to send Patriot missile systems to Ukraine, while bipartisan Congressional momentum drove new sanctions legislation aimed at pressuring Russia into peace talks.
European Union diplomats neared consensus on an 18th round of sanctions targeting Russian crude, potentially with a lower price cap. Markets initially priced in supply constriction risks, providing early bullish support.
However, the geopolitical premium faded when Trump announced a 50-day deadline to end the Ukraine war. UBS analyst Giovanni Staunovo noted this delay reduced expectations of immediate market tightening, leading to a retreat from Monday’s three-week high of $69.65.
Iraq Supply Disruptions Provide Persistent Support
Iran-backed militias conducted drone attacks on Iraq’s Kurdistan region for four consecutive days, forcing production shutdowns at oilfields operated by Gulf Keystone, DNO, and Hunt Oil. Officials reported output slashed by 140,000-150,000 barrels per day, more than half the region’s normal 280,000 bpd production.
Andrew Lipow of Lipow Oil Associates noted the attacks demonstrated “how vulnerable oil supplies are to attacks using low technology.” Oil prices rose $1 on Thursday following the fourth day of strikes.
Chinese Demand Signals Offer Mixed Picture
China delivered encouraging import data with crude oil imports rising 7.4% year-on-year in June to 12.14 million barrels per day, the highest since August 2024. Chinese refiners ramped up throughput following maintenance shutdowns, aiming to meet third-quarter demand and rebuild gasoline and diesel stocks at multi-year lows.
However, J.P. Morgan flagged risks from China’s storage levels at 95% of 2020 peak capacity, warning that reserve releases into Western pricing hubs could temper price gains.
China’s second-quarter GDP exceeded expectations, but analysts attributed results to short-term government support and pre-tariff export rushes. Consumer sentiment remained weak, with declining prices and export demand pointing to potential consumption softness.
Trade Policy Uncertainty Weighs on Demand Outlook
Trump announced 30% tariffs on European and Mexican imports starting August 1, while the EU prepared retaliatory measures targeting $84 billion in U.S. goods. Trump also warned of “very severe tariffs” on Russia without a Ukraine deal within 50 days.
Ashley Kelty of Panmure Liberum noted “near-term prices are set to remain volatile due to uncertainty over the final scale of U.S. tariffs and the resultant impact on global growth.” These measures increased likelihood of reduced fuel consumption globally. Markets remained jittery awaiting tariff implementation, which could redirect oil supplies from the U.S. to India and China.
U.S. Inventory Data Provides Conflicting Signals
The American Petroleum Institute initially estimated crude stocks rose 839,000 barrels, with gasoline up 1.93 million barrels and distillates climbing 828,000 barrels, suggesting ample domestic supply.
However, the official EIA report showed crude stocks fell 3.9 million barrels versus expectations for only a 552,000-barrel draw. U.S. crude exports surged to 3.5 million barrels per day, providing bullish support.
The demand side proved concerning. Gasoline inventories rose 3.4 million barrels and distillates increased 4.2 million barrels, both above forecasts. Implied product demand fell significantly—gasoline down 670,000 bpd and distillates off 245,000 bpd—reflecting soft end-user demand.
OPEC Maintains Optimistic Demand Outlook
OPEC’s secretary general told Russian media that oil demand would remain “very strong” through the third quarter. The organization’s monthly report projected stronger global demand in the second half, highlighting economic resilience in Brazil, India, and China, with stabilization signs in the U.S. and EU.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
The main trend is up according to the weekly swing chart. However, a trade through $62.69 will shift momentum to the downside. Despite the steep sell-off and the potentially bearish closing price reversal top the week-ending June 20, the market has not followed through to the downside, suggesting the presence of buyers.
Holding above the 52-week moving average at $64.41 indicates buyers are defending against another plunge. Additionally, the ability to sustain a move over the long-term pivot at $65.37 will signal the buying is getting stronger.
There are two other pivots to note. The April bottom at $51.18 and the June top at $77.09 has formed a pivot at $64.13 that has acted as support the past four weeks.
Additionally, the short-term range is $77.09 to $62.69. If there is a breakout to the upside then its pivot at $69.89 will become the initial upside target.
Essentially, bullish traders are looking for the 52-week moving average to hold as support and for a sustained breakout over $63.37. Bearish traders want to see a complete breakdown under the 52-week moving average.
Weekly Technical Forecast
The direction of the Weekly Light Crude Oil Futures market the week ending July 25 is likely to be determined by trader reaction to $65.37 and $64.41. The pivotal indicator will be the 52-week moving average, currently at $64.41.
Bullish Scenario
A sustained move over $65.37 will signal the presence of buyers. If this creates enough upside momentum, we could see a near-term rally into a minor pivot at $69.89. The major upside target is the resistance zone at $77.09 to $81.60.
Bearish Scenario
A sustained move under $64.41 will indicate the return of sellers. If it generates enough downside momentum, we could witness the start of a prolonged down move into the support zone at $52.00 to $51.18.
Crude Oil Outlook Hinges on $64.41 Support as Fundamentals Tighten
While WTI settled lower through Thursday, the broader market picture remains fundamentally constructive. The IEA’s confirmation that rising output isn’t translating into inventory builds points to underlying demand resilience. Geopolitical risks — from Iraq’s supply outages to broader regional tensions — continue to present upside potential, even if price action remains temporarily weighed by macro uncertainty.
Technically, the 52-week moving average at $64.41 is a key line in the sand. With a long-term pivot level at $65.37, the market holds a bullish bias above this zone. A sustained break above both levels would confirm support and likely draw buyers back into the market. Conversely, a move below $64.41 would signal deeper downside risk and shift the focus toward demand deterioration.
For now, the setup leans bullish, provided prices remain anchored above the 52-week average.