Oil prices fluctuate again - is there any short-term upside left?
Crude oil extended its short-term gains on Tuesday, rising 0.6% despite tariff-related headlines and OPEC+ announcing a production quota increase over the weekend. However, this morning, the market is trading flat around the $68 level as investors await the EIA inventory data at 10:30 a.m. ET.
For oil markets specifically, these developments are worth monitoring:
- Despite upcoming OPEC+ supply increases, including a 548,000 bpd rise for August and a larger quota for the UAE in September, market analysts note that inventories remain tight, suggesting demand is still absorbing the extra barrels.
- Tensions in the Middle East, particularly deadly drone and speedboat attacks off Yemen's coast, have reintroduced supply disruption risks, helping oil prices stay elevated despite bearish inventory data.
- The American Petroleum Institute (API) reported a surprising 7.1 million-barrel build in U.S. crude inventories for the week ending July 4, contrasting with expectations of a draw. However, gasoline and distillate stocks both declined, which softened the bearish impact.
- President Donald Trump announced a 50% tariff on imported copper and signaled more tariffs on semiconductors and pharmaceuticals, stirring uncertainty across commodities markets.
Conclusion
Crude oil remains virtually flat this morning as markets digest recent tariff-related developments and await further data. Despite bearish headlines - including the OPEC+ supply boost - oil has shown relative resilience.
It remains unclear whether this consolidation signals a short-term top or simply a pause before another move higher.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil continues to trade around the $68 level - its highest since June 23.
- 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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