Crude oil is still hovering around the $65 level - which direction will it move next?
Crude oil closed 0.43% higher on Friday, continuing its choppy performance following last week's sharp sell-off. Today, prices are down 0.1%, remaining in a sideways pattern despite rallying stock markets and a weak U.S. dollar, as investors await upcoming tariff-related developments.
For oil markets specifically, these developments are worth monitoring:
- Both Brent and WTI posted their biggest weekly drops since March 2023 but are still on track for a second straight monthly gain of over 5%, driven by earlier conflict-driven rallies.
- The 12-day Israel-Iran conflict had pushed oil above $80, but prices retreated as a U.S.-brokered ceasefire has largely held, reducing fears of long-term supply disruptions.
- OPEC+ is expected to raise output by 411,000 barrels per day in August, continuing a gradual reversal of earlier cuts. This comes ahead of their July 6 meeting.
- Analysts warn that potential supply increases are underpriced, leaving crude markets vulnerable to renewed weakness, especially during the low-demand "shoulder season."
- Analysts say uncertainty over global growth continues to cap oil prices, even as geopolitical tensions ease and the market awaits further clarity from OPEC+ and economic data.
Conclusion
Crude oil continues to trade sideways, with volatility easing after last week's sharp sell-off. However, the market remains highly sensitive to geopolitical headlines.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil experienced a sharp sell-off last week and has since been trading sideways.
- The ongoing tariff-related volatility, combined with economic data, is adding to market uncertainty.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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