Light crude oil futures opened lower in the European session on Monday (August 4), breaking below the key short-term pivot point of $67.31, which suggests a deeper correction may occur. Last week's rebound briefly pushed the price to $70.51.



OPEC+ production increase puts pressure on oil prices

Crude oil prices fell sharply after OPEC+ confirmed plans to increase production by 547,000 barrels per day (bpd) in September. The supply increase, while widely expected, marks the complete removal of the group’s largest production cuts—about 2.5 million bpd, or 2.4% of global demand.

While that headline figure is substantial, Goldman Sachs notes that actual supply growth is likely to total around 1.7 million bpd due to offsetting cuts by previously overproducing members.

As OPEC+ accelerates its efforts to restore crude oil supply, the market is still assessing the impact of growing trade protectionism. The recent US tariffs on goods from several countries have added another layer of uncertainty to commodity markets, including crude oil.

Sanctions on Russia cast a shadow over global supply outlook

Geopolitical risks remain elevated, particularly regarding Russian crude oil shipments, with the US threatening to impose 100% secondary tariffs on Russian oil buyers already impacting trade routes.

At least two Russian cargo ships bound for India have been rerouted, and according to ING, 1.7 million barrels per day of supply could be at risk if Indian refiners pull out.

However, India appears committed to maintaining its energy ties with Moscow. Two Indian officials confirmed that the country will continue to import Russian crude oil despite political pressure. This stance may limit near-term supply disruptions, but the threat of more sanctions remains a driver of instability.

Economic data and Fed policy

The focus is now on economic data and the Fed as this will impact growth expectations for the coming months. The tariff trade is now over as almost everything is priced in and everyone knows a deal will be reached in the 10-20% tariff range.

With the Fed's forward guidance still leaning towards accommodative policy, the outlook for economic growth and inflation should remain tilted to the upside for now. This should keep the market supported, but overall, WTI should remain range-bound between $60 and $80.

Technical Analysis


(WTI crude oil daily chart source: Yihuitong)

On the daily chart, WTI crude oil prices continue to fluctuate between the key support level of 64.00 and the resistance level of 72.00. Buyers are likely to continue entering the market near this support level, with a clear risk below this level, targeting a move back towards the 72.00 resistance level. On the other hand, sellers will need to break through this support level to open the door for a further decline towards the 55.00 mark.

At 19:35 Beijing time, WTI crude oil was quoted at US$66.12 per barrel, down 1.80%.