Crude oil approaches the $60 level – is this a new downtrend?
Crude oil closed 0.74% lower on Wednesday, pulling back after rallying up to a daily high of $64.19. It reacted to a report of a potential Israeli strike on Iran, but the rally was very short-lived, and today, crude oil is 1.7% lower, as it nears the $60 level.
For oil markets specifically, these developments are worth monitoring:
· OPEC+ may increase oil production by 411,000 barrels per day in July, adding to similar hikes in May and June that have already pressured prices. The decision, to be discussed at the June 1 meeting, could tip global supply beyond demand growth.
- Crude inventories increased by 1.3 million barrels to a total of 443.2 million barrels for the week ending May 16, according to the EIA.
- Crude oil prices are still moving sideways as the market reacts to conflicting signals: fears of Middle East conflict and rising crude stockpiles.
Conclusion
Crude oil is pulling back from $64, reaching the $60 level. Conflicting news about the Middle East and rising stockpiles continue to impact the market, resulting in more sideways trading.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil contracts are pulling back following Wednesday’s surge driven by Middle East news.
- Supply concerns continue to outweigh the positive sentiment from the U.S.-China tariff reduction agreement.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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