Crude oil has pulled back from its mid-April highs - so what’s next?
Crude oil declined by 0.82% on Wednesday, remaining below its mid-April local highs. This morning, it is down another 2.2%, further retracing recent gains, although it has rebounded from the key $60 support level.
For oil markets specifically, these developments are worth monitoring:
- Yesterday's much higher than expected inventories buildup of +3.5 million barrels is negative for oil prices, significantly exceeding analysts' expectations for a 1.1 million barrels draw.
- U.S. President Donald Trump said on Thursday that the United States was getting very close to securing a nuclear deal with Iran, which could potentially release additional supply into the market.
- Economic indicators showed mixed signals with PPI release lower than expected at -0.5% month-over-month, while Retail Sales were higher than expected at +0.1% month-over-month.
- The IEA has lifted its oil demand growth forecast in 2025 to 740,000 barrels per day, up 20,000 bpd from the previous report, citing higher economic growth forecasts and lower oil prices supporting consumption.
Oil: Still Below April Highs
Oil’s recent rebound has stalled near mid-April highs, which are acting as resistance around $63. A more significant resistance zone lies at $65–66, marked by previous medium- to long-term local lows.
Inventories: Much Higher
The latest inventory build of 3.5 million barrels far exceeded expectations and has added to the selling pressure on oil prices.
Conclusion
Crude oil is facing downward pressure amid rising inventories and potential additional supply from Iran. While there had been signs of strength in recent sessions, today’s sharp pullback suggests growing market caution.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil fell 0.82% on Wednesday and is down another 2.2% today.
- The key support zone around $60 remains critical for near-term price action.
- The large crude inventory build reported by the EIA and potential increased supply from Iran are creating significant headwinds.
- Economic data presents a mixed picture, with negative PPI potentially supportive for oil demand but not enough to offset supply concerns.
The full version of today’s analysis - today’s Oil Trading Alert - is bigger than what you read above, and it includes the current Crude Oil futures contract position. I encourage you to subscribe and read the details today (with a single-time 7-day free trial). Oil Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Stock Trading Alerts.
And if you’re not yet on our free mailing list, I strongly encourage you to join it - you’ll stay up-to-date with our free analyses that will still put you ahead of 99% of investors that don’t have access to this information. Join our free oil newsletter today.
Thank you.
Paul Rejczak,
Stock Trading Strategist
Recommended for You
- Tax-Optimized Legacy Planning: How Physical Gold IRAs Work in 2025 Learn how forward-thinking investors are protecting generational wealth through tax-advantaged precious metals strategies that function independently of market volatility.
- Volatility Breakout System: Paul's Proprietary Trading Approach Discover how this market-tested trading system has outperformed the S&P 500 by identifying key turning points and generating precise entry signals.