Key Points:
- WTI crude fell 0.7% to $61.95, while Brent slipped 0.6% to $65.95.
- IEA now expects global supply to outpace demand growth, driven by rising OPEC+ output.
- US crude stockpiles rose for a second consecutive week, signalling softening demand.
- Western sanctions on Russia and Trump’s tariff push add to volatility but fail to lift prices.
Oil prices dipped further in early Friday trade, extending losses from the previous session as the narrative shifted sharply back toward fundamentals.
At last check, Brent crude was down 0.6% to $65.95 a barrel, while WTI dropped 0.7% to $61.95. Traders are increasingly concerned that the global supply-demand balance is tilting toward a surplus, especially as demand from the US continues to slow.
The International Energy Agency (IEA) this week revised its outlook, projecting global oil supply will rise faster than previously expected. This comes as OPEC+ remains on track to increase output, even as signs of demand erosion begin to take hold.
The US, the world’s largest consumer, reported a second straight week of crude inventory builds. This was another red flag for those banking on a tight oil market.
Demand Softens as Sanctions Wane in Impact
Despite growing tension in the Middle East and new sanctions rhetoric, the geopolitical premium in oil prices appears to be fading.
President Trump’s recent push for the EU to impose tariffs on Chinese and Indian goods as part of a broader pressure campaign against Russia briefly lifted prices earlier this week.
However, the market has since recalibrated, focusing instead on fundamentals.
The lack of sustained upside following sanction headlines suggests traders view current supply dynamics as a more dominant driver.
With US demand slipping and stockpiles rising, the potential for oversupply appears more pressing than the threat of disruptions.
Technical Analysis
Crude oil (WTI) is trading at $62.33, up +0.17% on the day, but remains under pressure after a volatile year.
The chart shows oil bouncing from its April low of $55.12, peaking at $77.90 in July before slipping back into the low $60s. Moving averages (5,10,30) are converging, suggesting indecision, while the MACD remains flat near the zero line, showing weak momentum.
Support is seen near $59.00, while resistance sits around $67.00, followed by July’s peak of $77.90. Until a breakout occurs, the market appears poised to consolidate within this range, with traders monitoring supply-demand catalysts and the impact of Fed rate adjustments on risk appetite.
Cautious Forecast
In the short term, crude prices are likely to remain pressured between $61.00 and $64.00 as supply-side concerns outweigh cross-border catalysts.
The IEA’s updated outlook, combined with rising US inventories, will likely keep upward momentum capped even amid sanctions or Middle East flashpoints.
Over the medium term, if demand continues to soften while OPEC+ remains on its current path, prices could edge lower toward the $59.00–60.00 range.
A sharper drop in consumption, particularly in the U,S could trigger a more extended decline, unless offset by a production cut or unexpected supply disruption.
Traders should watch next week’s EIA inventory data and OPEC+ commentary closely for any shift in tone. Until then, rallies may remain shallow, and downside risk persists.
