Oil prices continue to consolidate – is this still a flat correction of the previous decline?
Crude oil closed 0.76% lower on Friday, following a 0.67% decline on Thursday. The market has retraced part of Wednesday’s advance amid uncertainty over OPEC+, tariff-related developments, and other factors. However, today crude oil is rebounding, gaining 1.20%, though it remains within a consolidation zone.
For oil markets specifically, these developments are worth monitoring:
- Oil prices recovered from early losses on Monday, supported by a tight physical market. WTI advanced above $67, shrugging off concerns about rising supply and U.S. tariffs.
- OPEC+ agreed to increase production by 548,000 barrels per day in August, exceeding prior monthly hikes of 411,000 bpd. A similar increase is under consideration for September, signaling a shift toward regaining market share.
- Despite the supply hike, the oil market remains tight, helping support prices. Analysts note that much of the output increase has been unevenly distributed, with Saudi Arabia providing most of the additional barrels.
- U.S. President Trump’s new tariff schedule, delayed to August 1, has introduced further uncertainty. Investors worry that higher tariffs could slow economic activity and reduce oil demand in the second half of 2025.
Conclusion
WTI crude is gaining this morning, retracing its Thursday–Friday losses amid hopes for economic improvement linked to tariff-related developments, despite the recent OPEC+ production increase. However, the market remains within a short-term consolidation, which still appears to be a flat correction of the sharp declines seen on June 23 and 24.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil is rebounding from last week’s weakness, with tariff news driving sentiment.
- The ongoing tariff-related volatility, combined with economic data, is adding to market uncertainty.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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