Crude oil retraces its overnight gains - what’s next for the market?
Crude oil closed 1.56% higher on Wednesday, continuing its short-term consolidation above the key $60 level. The market remains divided, caught between supply-side concerns - including the anticipated OPEC+ meeting this weekend - and ongoing tariff-related developments.
Earlier today, oil prices rose following a U.S. court decision that blocked most of President Donald Trump’s tariffs. However, they are currently trading 0.2% lower, impacted by a broader equity market pullback, renewed tariff uncertainty, and mixed economic data.
For oil markets specifically, these developments are worth monitoring:
- Bjarne Schieldrop, Chief Commodities Analyst at SEB, noted that market sentiment improved as Trump’s tariff setbacks reduced global economic headwinds - potentially increasing oil demand due to a more robust global economy.
- Concerns remain about possible new sanctions on Russian crude. Meanwhile, the OPEC+ group could decide this Saturday to accelerate oil production increases in July.
- Technical support levels: The $60 level remains key support, with the next major support around $58, based on recent local lows.
Daily Chart: Ongoing Consolidation
Crude oil prices continue to trade sideways as investors await critical supply data. The EIA Oil Inventories Report is due at 11:00 a.m. today. Yesterday’s API Weekly Crude Oil Stock report showed a larger-than-expected draw of 4.236 million barrels, which is influencing sentiment.
Conclusion
Crude oil remains in a sideways consolidation pattern as the market awaits clarity from the upcoming OPEC+ decision. Meanwhile, geopolitical and trade developments continue to sway investor sentiment, as reflected in this week’s rebound in equities after last week’s decline.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil is consolidating above the $60 support level.
- Anticipated OPEC+ supply increases are weighing on upside momentum.
- Traders are awaiting EIA Crude Oil Inventories data.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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