Oil Markets Struggle as Supply Rises and Demand Fears Linger

Oil prices entered Thursday morning with Brent crude near $61.50 and WTI above $58, reflecting a market still under pressure despite a modest overnight rebound.

The latest data and technical charts show a market grappling with excess supply, weak demand signals, and persistent uncertainty around global trade.

The previous session saw prices fall sharply, with Brent and WTI both losing about 1.7%. This drop followed OPEC+’s decision to accelerate production increases, a move that added to already mounting concerns about oversupply.

OPEC+ will raise output by 411,000 barrels per day starting in June, with Saudi Arabia pushing for stricter discipline among members. This policy shift comes as US producers also slow drilling activity, especially in the Permian Basin, in response to lower prices and shrinking margins.

US inventory data provided a brief respite for bulls. Government figures showed crude stocks fell by more than 2 million barrels last week, beating expectations. However, gasoline prices rose, and analysts worry that demand is not recovering as the US enters the summer driving season.

The drawdown in crude stocks, while positive, has not been enough to reverse the broader downward trend in oil prices, which have fallen more than 17% since the start of 2025.

Trade tensions continue to weigh on sentiment. Hopes for a breakthrough in US-China negotiations remain muted after President Trump hinted at a trade deal with the UK but refused to roll back tariffs on China.

Market participants fear that ongoing tariffs could further erode global economic growth and oil demand. Analysts expect the peak impact of these trade disruptions to hit in the third quarter, with prices likely to remain stuck in the mid-to-high $50s for WTI.

Oil Market Outlook

Technical analysis confirms the bearish outlook. Both Brent and WTI trade below their 200-period simple moving averages, a classic sign of a sustained downtrend. Shorter-term moving averages have started to flatten, but the overall trend remains negative.

‘The Relative Strength Index (RSI) for both contracts hovers near the midpoint, suggesting neither oversold nor overbought conditions, but momentum is weak.

Bollinger Bands show prices hugging the lower edge, indicating persistent selling pressure and low volatility. MACD readings remain negative, with no clear sign of a bullish crossover.

Support levels for Brent sit at $60 and $61, with resistance at $62.50 and $64. WTI faces support at $57 and resistance at $58.50 and $60. Volume remains subdued, with no significant inflows into oil ETFs, reflecting cautious investor sentiment.

The market’s core story is simple: supply is rising faster than demand, and traders see little reason to bet on a quick turnaround. Until trade tensions ease or demand picks up, oil prices will likely remain under pressure.

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