Oil News: WTI Slumps Below 200-Day MA as IEA Cuts Oil Demand Outlook

Technical Breakdown Pressures Light Crude Futures

Light crude oil futures are under pressure on Wednesday, with prices retreating after failing to hold above the 200-day moving average at $64.07. The market briefly breached key support at $62.69—the June low—before rebounding slightly.

However, technical sentiment has turned decidedly bearish. With $62.69 now acting as resistance, traders are eyeing further downside toward the May 30 bottom at $56.91. A move below that level could open the door to a steeper selloff, especially if prices remain capped below the 50-day moving average at $65.60.

At 10:49 GMT, Light Crude Oil Futures are trading $62.68, down $0.49 or -0.78%.

IEA Raises Supply Forecast, Weighs on Oil Prices

Adding to the downside pressure, the International Energy Agency (IEA) revised its supply forecast upward on Wednesday, citing increased output from OPEC+ producers.

At the same time, the agency trimmed its global oil demand outlook, pointing to sluggish consumption across major economies. This rebalancing of the supply-demand equation tilted sentiment bearish, with traders now pricing in weaker fundamentals through the rest of the year.

Geopolitical Watch: Traders Await U.S.-Russia Talks

Markets are also closely watching the upcoming meeting between U.S. President Joe Biden and Russian President Vladimir Putin, scheduled for Friday in Alaska. While the summit will focus on the war in Ukraine, analysts expect no additional sanctions on Russian oil.

According to PVM Oil’s Tamas Varga, this has contributed to the softening in crude prices, as uninterrupted Russian exports continue to flow into southern and eastern markets.

U.S. Inventory Data Sends Mixed Signals

The latest American Petroleum Institute (API) data showed a 1.52 million barrel build in U.S. crude inventories last week, reinforcing supply-side concerns. Gasoline stockpiles declined, while distillates posted a slight gain.

Traders now await the official Energy Information Administration (EIA) report due later today, with consensus expecting a modest 300,000 barrel draw.

Meanwhile, the EIA’s Short-Term Energy Outlook issued Tuesday projected Brent crude prices to average below $60 per barrel in Q4—the lowest quarterly average since 2020.

Oil Prices Forecast: Bearish Below Key Technicals and Soft Demand Outlook

With a failed breakout above the 200-day moving average and fundamental data skewing bearish—higher supply, softening demand, and stable Russian exports—WTI crude is positioned for further downside.

Unless prices can reclaim the $65.60 level, the technical setup favors continued weakness, with sub-$60 levels likely in play in the near term.

Traders should watch for confirmation from EIA stockpile data and Friday’s geopolitical developments, but for now, the market bias remains bearish.

More Information in our Economic Calendar.