Oil News: Technical and Supply Pressure Align to Deepen Bearish Oil Outlook

Crude Oil Slumps Below Key Technical Levels as OPEC Supply and Fed Cuts Fail to Lift Demand

Light crude oil futures settled sharply lower on Friday, closing at $62.40, down 1.36%, as the market broke below critical technical levels and demand concerns overshadowed the Federal Reserve’s first rate cut of the year. Price action slipped beneath both the 200-day moving average at $63.00 and the 50-day at $63.78—levels that have capped rallies for months, reinforcing the broader downtrend.

The long-term range stretching from $47.98 to $80.43 now serves as a backdrop for positioning. The mid-point of that multi-year range, $64.21, has acted as a structural pivot—and Friday’s close below it confirms the bearish tone. As long as crude trades under this zone, downside targets at $61.34, $61.10, and the August 13 swing low of $60.77 remain in play.

OPEC Output Strategy Fails to Offset Heavy Supply

Market sentiment continues to deteriorate as robust global supplies pressure prices despite OPEC’s reduced output cuts. “We haven’t seen an impact on Russian crude oil exports from sanctions,” said Andrew Lipow of Lipow Oil Associates, highlighting the ongoing resilience of supply flows that are keeping the market well-supplied.

OPEC’s diminished curbs, combined with resilient U.S. production and Russian volumes unaffected by sanctions, are providing no relief to the demand side. The latest Energy Information Administration (EIA) data showed a surprise 4 million-barrel build in U.S. distillate stocks, reflecting slack diesel demand in an already saturated market.

Federal Reserve Rate Cuts Not Enough to Lift Oil Prices

While the Fed delivered a 25 basis-point rate cut on Wednesday—its first of the year—expectations for higher oil demand fell flat. Typically, lower borrowing costs would support economic activity and oil consumption, but traders see little immediate benefit under current market conditions.

“Future rate cuts won’t support oil if they just weaken the dollar,” said John Kilduff of Again Capital. He added that the Fed would need to act more decisively with a 50 basis-point cut to materially support demand. But so far, weak jobs data and plunging U.S. homebuilding activity suggest the macro environment isn’t yet conducive to energy growth.

Oil Prices Forecast: Bearish Below $64.21, Eyes on $60.77 Support

Technical and fundamental signals remain aligned to the downside. With crude unable to reclaim its moving averages or the pivotal $64.21 level, any rally is likely to encounter resistance at $65.06, $65.68, and $65.83. Unless that upper band breaks, crude remains biased lower, with $60.77 in clear sight. This reinforces a bearish oil prices forecast in the short term.

More Information in our Economic Calendar.