Tuesday’s gains were largely technical, with market participants reacting to perceived oversold levels. Analysts noted that the drop below $60 a barrel triggered fresh buying interest, with $60 acting as a key psychological pivot. Brent crude also snapped a six-day losing streak, supported by similar sentiment. However, the market still faces resistance at $59.68 and $60.09. A sustained move above these levels could reinvigorate bullish momentum.
OPEC+ Output Strategy Fuels Uncertainty
Overhang from OPEC+ remains a major concern. The group’s decision to increase output for a second straight month has undermined bullish sentiment. While Saudi Arabia did modestly cut its official selling prices, analysts argue it’s not an aggressive bid for market share but rather a cautious recalibration. Still, expectations that supply will exceed demand have pushed oil over 20% lower since April.
Demand Signals Mixed as China Returns, U.S. Services Pick Up
The return of Chinese buyers following a five-day holiday added marginal support, as the world’s top importer likely took advantage of discounted prices. Additionally, U.S. economic data surprised to the upside, with the ISM services PMI rising to 51.6, indicating modest expansion in the largest oil-consuming economy. But ongoing trade risks and broader demand uncertainties remain key limiting factors.
Analysts Slash Oil Prices Forecast on Fundamentals
Major institutions have revised their oil prices projections downward. Barclays cut its Brent forecast by $4 to $70 per barrel for 2025 and lowered its 2026 estimate to $62, citing weakened fundamentals and trade tensions. Goldman Sachs also trimmed its outlook, factoring in an expected 400,000 bpd supply boost from OPEC+ in July. These revisions underscore growing concerns that any short-term rally may be unsustainable.
Market Outlook: Bearish Bias Until Key Resistance Clears
While Tuesday’s rebound provided technical relief, broader fundamentals remain skewed to the downside. Oversupply fears, uncertain demand, and downgraded price forecasts all suggest continued bearish pressure. WTI must decisively clear resistance near $60 to alter sentiment. Until then, rallies are likely to face selling into strength.
More Information in our Economic Calendar.
