Crude oil trading reminder: Risk appetite has rebounded, coupled with downward demand expectations, oil prices remain low and volatile
2025-08-06 09:57:45
After four consecutive days of decline, international crude oil prices rebounded on Wednesday, breaking away from a five-week low hit the previous day. The market is again focused on potential supply disruptions due to the US President's threat to impose tariffs on Asian countries' crude oil imports from Russia.
During the Asian trading session on Wednesday, Brent crude futures rose 0.4% to $67.93 a barrel; WTI crude oil rose 0.4% to $65.44 a barrel.
The day before, both major crude oil benchmark contracts fell by more than $1, hitting a five-week low, mainly due to OPEC+'s announcement that it would increase production in September.
“Investors are assessing whether Asian countries will reduce Russian crude oil purchases amid tariff threats,” said Yuki Takashima, an economist at Nomura Securities. “If their imports remain stable, WTI is expected to remain between $60 and $70 this month.”
OPEC+ (the Organization of the Petroleum Exporting Countries and its allies) announced on Sunday that it would increase production by 547,000 barrels per day in September, a decision that prematurely ended the group's previous production cut agreement.
OPEC+ currently supplies nearly half of the world's crude oil, and its move to accelerate production recovery is aimed at seizing market share.
However, this move has also exacerbated market concerns about oversupply, especially in the context of unstable demand recovery, further increasing uncertainty in the oil market.
Asian countries are facing immense diplomatic and economic pressure from the U.S. Although the U.S. hopes to use this approach to push Russia to make a peaceful decision, Asian governments have made it clear that the tariff threats are "baseless" and vowed to defend their economic interests.
This situation has once again strained international trade relations, and some market participants are worried that this may lead to disruptions in the crude oil supply chain.
In addition to geopolitical risk factors, U.S. inventory data also provided support for oil prices. "The latest U.S. crude oil inventory data showed tighter supply, providing substantial support to the market," Yuki Takashima added.
According to market research, data from the American Petroleum Institute (API) showed that U.S. crude oil inventories fell by 4.2 million barrels last week, far exceeding the previously expected drop of 600,000 barrels. The U.S. Energy Information Administration (EIA) will release official inventory data on Wednesday evening. Further confirmation of a significant decline could reinforce market expectations of tight supply and demand.
Judging from the daily chart of U.S. crude oil (WTI), the price rebounded significantly after touching the key support area above $60, forming a bullish engulfing pattern, indicating that short-term bulls have regained the initiative.
The price has now regained its footing above the 5-day moving average and is trying to move closer to the 20-day moving average. If it can effectively break through the short-term resistance level of $65.80, it will be expected to challenge the medium-term resistance area near $67.50.
The Relative Strength Index (RSI) has rebounded above neutral territory, and the MACD, while still in negative territory, is showing signs of narrowing, suggesting weakening downward momentum. Overall, absent any new negative supply news, WTI is likely to experience a short-term volatile rebound. However, significant pressure from the upper moving average remains, and a breakout with significant volume remains a concern.
Editor's opinion:
While oil prices have rebounded in the short term due to declining inventories and tariff threats, they remain under pressure in the medium and long term from a combination of growing supply and trade concerns. In particular, OPEC+'s accelerated production increases, the US's high-intensity diplomatic pressure tactics, and the uncertainty surrounding Asian countries' energy policies are likely to keep the oil market volatile and in a state of adjustment. In the short term, caution is advised regarding the market's high sensitivity to news.
During the Asian trading session on Wednesday, Brent crude futures rose 0.4% to $67.93 a barrel; WTI crude oil rose 0.4% to $65.44 a barrel.
The day before, both major crude oil benchmark contracts fell by more than $1, hitting a five-week low, mainly due to OPEC+'s announcement that it would increase production in September.
“Investors are assessing whether Asian countries will reduce Russian crude oil purchases amid tariff threats,” said Yuki Takashima, an economist at Nomura Securities. “If their imports remain stable, WTI is expected to remain between $60 and $70 this month.”
OPEC+ (the Organization of the Petroleum Exporting Countries and its allies) announced on Sunday that it would increase production by 547,000 barrels per day in September, a decision that prematurely ended the group's previous production cut agreement.
OPEC+ currently supplies nearly half of the world's crude oil, and its move to accelerate production recovery is aimed at seizing market share.
However, this move has also exacerbated market concerns about oversupply, especially in the context of unstable demand recovery, further increasing uncertainty in the oil market.
Asian countries are facing immense diplomatic and economic pressure from the U.S. Although the U.S. hopes to use this approach to push Russia to make a peaceful decision, Asian governments have made it clear that the tariff threats are "baseless" and vowed to defend their economic interests.
This situation has once again strained international trade relations, and some market participants are worried that this may lead to disruptions in the crude oil supply chain.
In addition to geopolitical risk factors, U.S. inventory data also provided support for oil prices. "The latest U.S. crude oil inventory data showed tighter supply, providing substantial support to the market," Yuki Takashima added.
According to market research, data from the American Petroleum Institute (API) showed that U.S. crude oil inventories fell by 4.2 million barrels last week, far exceeding the previously expected drop of 600,000 barrels. The U.S. Energy Information Administration (EIA) will release official inventory data on Wednesday evening. Further confirmation of a significant decline could reinforce market expectations of tight supply and demand.
Judging from the daily chart of U.S. crude oil (WTI), the price rebounded significantly after touching the key support area above $60, forming a bullish engulfing pattern, indicating that short-term bulls have regained the initiative.
The price has now regained its footing above the 5-day moving average and is trying to move closer to the 20-day moving average. If it can effectively break through the short-term resistance level of $65.80, it will be expected to challenge the medium-term resistance area near $67.50.
The Relative Strength Index (RSI) has rebounded above neutral territory, and the MACD, while still in negative territory, is showing signs of narrowing, suggesting weakening downward momentum. Overall, absent any new negative supply news, WTI is likely to experience a short-term volatile rebound. However, significant pressure from the upper moving average remains, and a breakout with significant volume remains a concern.
Editor's opinion:
While oil prices have rebounded in the short term due to declining inventories and tariff threats, they remain under pressure in the medium and long term from a combination of growing supply and trade concerns. In particular, OPEC+'s accelerated production increases, the US's high-intensity diplomatic pressure tactics, and the uncertainty surrounding Asian countries' energy policies are likely to keep the oil market volatile and in a state of adjustment. In the short term, caution is advised regarding the market's high sensitivity to news.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
