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Can the $59.51 Pivot Hold in the Face of Bearish Pressure?
A bounce from $59.51 could form a secondary higher bottom, giving bulls a potential setup to retest the 50-day average. However, if this support fails, technical selling could intensify, targeting a deeper support zone between $54.83 and $54.01. The price action suggests traders are hesitating as they weigh technical signals against bearish fundamental drivers.
OPEC+ Output Hike Looms Large Over Oil Prices Forecast
This week’s losses, with both Brent and WTI down roughly 2%, are largely tied to growing expectations that OPEC+ will raise output again in July. Market participants anticipate an increase of 411,000 barrels per day, continuing the group’s gradual unwind of 2.2 million bpd in voluntary production cuts. These increases have already added 1 million bpd in combined capacity between April and June.
Analysts note that even geopolitical risks, including reports of Israeli planning for a potential strike on Iranian nuclear sites and fresh EU and UK sanctions on Russian oil flows, have failed to counter the supply-driven sentiment. SEB’s Bjarne Schieldrop said, “Brent is down in response to expectations of OPEC+ expanding its production quota.”
U.S. Crude Stockpiles and Storage Demand Compound Bearish Outlook
Adding to downside pressure, U.S. crude inventories showed a significant build this week, suggesting demand is lagging behind supply growth. The surge in U.S. crude storage demand—now approaching pandemic-era levels—highlights market concerns about oversupply in the near term.
Further supply-side insights are expected from Friday’s Baker Hughes rig count, a key indicator of U.S. production capacity. Traders are also watching developments in U.S.-Iran nuclear negotiations, as a breakthrough could unleash more Iranian barrels into the global market.
Bearish Outlook Firm as Supply Narrative Dominates
With technical resistance intact and multiple fundamental drivers pointing to rising global supply, the oil market remains tilted to the downside. Unless the $59.51 support level holds and catalyzes a shift in sentiment, the path of least resistance appears bearish in the near term.
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