Oil prices remain below $65, but the mid-August low may prove to be significant.
Crude oil prices have been gaining recently, and yesterday they closed 1.42% higher, slightly above the $64 level. The market advanced on a larger-than-expected inventory draw and overall bullish sentiment in the stock market. Today, crude oil is down 0.1% as uncertainty lingers.
For oil markets specifically, these developments are worth monitoring:
- U.S. tariffs on India doubled to 50% in response to its Russian crude purchases. While Indian refiners briefly paused buying, they resumed soon after, and analysts expect flows from Russia to India to continue.
- Geopolitical risks remain elevated as Russia resumed crude flows to Hungary and Slovakia through the Druzhba pipeline while intensifying attacks on Ukrainian energy infrastructure. The Ukraine war continues to shape market sentiment, with the U.S. signaling potential new sanctions on Moscow.
- The U.S. economy expanded strongly in Q2, up 3.3%, beating the earlier 3.0% estimate after a Q1 contraction. The growth data, along with upcoming inflation and payroll reports, will factor into the Fed’s September meeting, with markets raising bets on a possible rate cut.
Conclusion
The crude oil futures contract remains above its upward trend line, but it is still below the key $65 resistance level. While there are no clear buy signals yet, the pattern of higher highs and higher lows suggests the market may be poised for further gains, potentially targeting a return to the $70 level.
My short-term outlook is neutral.
Here’s the breakdown:
- Crude oil is creeping higher but remains below the $65 level.
- Ongoing tariff-related news and economic data are adding to market uncertainty.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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