Weekly Oil Market Update: WTI Crude Extends Rally Amid Supply Tightness
In this week’s oil market recap, U.S. crude prices continued their upward trend, marking the fourth consecutive week of gains. West Texas Intermediate (WTI) reached a weekly high of $84.52 per barrel, its highest since late April. Brent crude saw a modest 0.15% weekly increase.
Last week, Light Crude Oil futures are trading $83.16, up $1.62 or +1.99%.
Chart Analysis Reveals Bullish Momentum
The provided chart illustrates WTI crude’s bullish trend since June. The price has broken through several key resistance levels, including the $80.22 mark. The current price of $83.16 is approaching the next significant resistance at $86.24. A breakthrough could potentially push prices towards the $92.02 level, which represents a major resistance point from September-October 2023.
Inventory Drawdowns Drive Weekly Gains
This week’s primary price driver was a significant reduction in U.S. crude inventories. Weekly data showed a 12.2 million barrel decrease in crude stocks and a 2.2 million barrel drop in gasoline inventories. The American Petroleum Institute reported an even larger weekly crude inventory draw of 9.163 million barrels, surpassing analysts’ expectations.
Summer Demand Outlook Strengthens
The American Automobile Association’s forecast of a 5.2% increase in Independence Day travel compared to last year supports the bullish sentiment for this week’s gasoline demand. This aligns with analysts’ predictions of a tighter market in the coming weeks as summer fuel consumption rises.
Geopolitical Tensions and OPEC+ Influence
This week saw Middle East tensions reintroduce a geopolitical risk premium to oil prices. Meanwhile, OPEC+ continues to support prices through production cuts, despite slight output increases from Nigeria and Iran in June.
Brent Oil Price Forecast
Every new Brent Oil analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Brent Oil forecastsShift in Weekly Market Sentiment
Recent weeks have witnessed hedge funds and money managers increasing their petroleum purchases, moving from bearishness to a more neutral stance. This shift provided additional support to this week’s prices.
Price Targets and Weekly Forecast
Looking ahead, UBS projects global oil demand growth of 1.5 million barrels per day this year. Both UBS and JPMorgan have set Brent crude price targets at $90 per barrel in the coming months, with UBS expecting this level to be reached this quarter.
Technical Outlook for the Week Ahead
The current uptrend remains intact, with potential for further gains next week. The chart clearly shows that a break above $86.24 for WTI could reaffirm the uptrend, potentially pushing prices toward $92.02. However, traders should also be aware of the support levels at $79.16 and $76.02, which could come into play if there’s a pullback.
Market Forecast for Next Week
The short-term outlook for oil prices remains bullish, supported by tightening supply, strong summer demand, and geopolitical factors. Traders should monitor next week’s EIA data, Middle East developments, and OPEC+ compliance for potential market-moving events. The chart suggests that the $86.24 level will be a key area to watch, as a breakthrough could accelerate the upward momentum.
