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Crude oil prices are on track for modest weekly gains, despite facing downward pressure from looming supply increases and technical resistance. Brent oil futures rose slightly to $64.77 per barrel, while West Texas Intermediate (WTI) crude futures edged up to $61.83, reflecting a cautious market balancing optimism from a U.S.-China trade truce against concerns over potential oversupply. The week saw prices climb about 1.5%, driven by early gains that later stalled as traders grappled with mixed signals from global supply dynamics and economic developments.
A significant factor capping oil prices is the prospect of increased global supply. OPEC+ is moving forward with plans to unwind voluntary production cuts, which could add substantial barrels to an already sensitive market. Additionally, ongoing nuclear negotiations between the U.S. and Iran raise the possibility of Iranian oil returning in force, with estimates suggesting an additional 400,000 barrels per day if sanctions are lifted. Recent statements indicating progress in these talks, though tempered by unresolved issues, have kept bullish sentiment in check, particularly as Iranian oil continues to flow to markets like China.
On the demand side, a temporary reprieve in the U.S.-China trade war has provided some support. The world’s two largest oil consumers agreed to a 90-day pause on escalating tariffs, alleviating fears of a sharp slowdown in global economic growth that could dent oil demand. However, the limited duration of this agreement and uncertainty over long-term trade policies have prevented a sustained price rally. Meanwhile, traders are closely monitoring the U.S. Federal Reserve for hints of interest rate cuts, which could stimulate economic growth and bolster oil demand, though no clear signals have emerged.
The International Energy Agency has added to the cautious outlook by raising its 2025 global oil supply growth forecast by 380,000 barrels per day, while also noting a slight uptick in demand projections. Despite this, the agency anticipates a potential surplus, signaling a slowdown in demand growth that could further pressure prices. This aligns with recent U.S. data showing mixed signals, including an unexpected rise in import prices driven by higher capital goods costs and a drop in building permits to a near two-year low, though housing starts showed resilience.
From a technical perspective, WTI faces stiff resistance at the 50-day moving average of $63.20, with prices struggling to break through after peaking at $63.43 earlier in the week. Key support lies at $59.13, and a breach below this level could trigger further declines. Without a clear bullish catalyst, such as a confirmed tightening of supply or stronger economic signals, the market leans bearish in the short term. As global trade uncertainties and supply dynamics continue to unfold, oil prices remain at a critical juncture, with investors bracing for volatility in the weeks ahead.
