WTI crude oil rose over 1.5% as supply disruption concerns intensified, but caution was taken regarding the risk of a fall.
2025-08-06 19:56:17
West Texas Intermediate (WTI) crude oil prices ended a four-day decline in European trading on Wednesday (August 6), closing at $66.16, up 1.53%. Crude oil prices rose as market concerns about potential supply disruptions continued to heat up.
Traders are weighing potential supply changes as India may reduce its oil imports from Russia in response to U.S. President Donald Trump's tariff threat over India's continued purchases of Russian oil. Trump announced on Tuesday that he would "substantially" increase tariffs on Indian imports over the next 24 hours due to India's continued Russian oil purchases.
West Africa-focused Tullow Oil cut its 2025 oil production forecast to 40,000-45,000 barrels per day (bpd) after selling its Gabon assets and reported an $80 million first-half loss on Wednesday, Reuters reported.
In addition, data from the American Petroleum Institute (API) showed that U.S. crude oil inventories fell by 4.2 million barrels last week, compared with an increase of 1.54 million barrels in the previous week. The decline in U.S. crude oil inventories exceeded market expectations of 1.8 million barrels, indicating stronger-than-expected demand.
However, the Organization of the Petroleum Exporting Countries and its allies, or OPEC+, recently announced that they would increase oil production by 547,000 barrels per day in September, effectively ending their latest round of production cuts earlier than expected, so oil prices may fall further amid concerns about oversupply.
While falling US crude oil inventories and seasonal demand signals have provided some support, both price and momentum indicators suggest the risk of further weakness. Bulls need to prove that this rebound is sustainable, otherwise, in the absence of stronger geopolitical risks, the short-term market bias remains bearish.
Bulls face severe test
(WTI crude oil daily chart source: Yihuitong)
WTI crude oil has recently attracted strong buying below $65 a barrel, a level that often serves as the starting point for sudden price rallies. However, with OPEC+ adding 2.2 million barrels per day to the market and concerns about the US economy growing, the sustainability of this support is in doubt, especially after oil prices plummeted by more than $5 over the past week.
Oil prices closed at their lowest level since early June on Tuesday, and traders should be wary of the risk of a prolonged decline.
Given the repeated occurrence of buying support below $65, it's inappropriate to act immediately if Tuesday's low is broken. Instead, $63.70 is worth watching, having served as resistance between May and June. A break below this level would strengthen the sell signal, allowing for a short position to be established with a stop-loss placed just above. $62.00 saw some movement earlier this year, but $60 appears to be a more critical downside target.
The 14-day relative strength index (RSI) is below 50, and the moving average convergence divergence (MACD) is negative and has fallen below the signal line. Both suggest that shorting on rallies may be more effective than buying on dips in the short term.
Of course, if oil prices still fail to effectively fall below $65 under the negative background, the market structure may reverse. Investors can establish long orders above this price level, set the stop loss below, and target the 200-day moving average or the resistance level of $68.44.
At 19:53 Beijing time, WTI crude oil was quoted at US$66.21 per barrel, up 1.61%.
Traders are weighing potential supply changes as India may reduce its oil imports from Russia in response to U.S. President Donald Trump's tariff threat over India's continued purchases of Russian oil. Trump announced on Tuesday that he would "substantially" increase tariffs on Indian imports over the next 24 hours due to India's continued Russian oil purchases.
West Africa-focused Tullow Oil cut its 2025 oil production forecast to 40,000-45,000 barrels per day (bpd) after selling its Gabon assets and reported an $80 million first-half loss on Wednesday, Reuters reported.
In addition, data from the American Petroleum Institute (API) showed that U.S. crude oil inventories fell by 4.2 million barrels last week, compared with an increase of 1.54 million barrels in the previous week. The decline in U.S. crude oil inventories exceeded market expectations of 1.8 million barrels, indicating stronger-than-expected demand.
However, the Organization of the Petroleum Exporting Countries and its allies, or OPEC+, recently announced that they would increase oil production by 547,000 barrels per day in September, effectively ending their latest round of production cuts earlier than expected, so oil prices may fall further amid concerns about oversupply.
While falling US crude oil inventories and seasonal demand signals have provided some support, both price and momentum indicators suggest the risk of further weakness. Bulls need to prove that this rebound is sustainable, otherwise, in the absence of stronger geopolitical risks, the short-term market bias remains bearish.
Bulls face severe test
(WTI crude oil daily chart source: Yihuitong)
WTI crude oil has recently attracted strong buying below $65 a barrel, a level that often serves as the starting point for sudden price rallies. However, with OPEC+ adding 2.2 million barrels per day to the market and concerns about the US economy growing, the sustainability of this support is in doubt, especially after oil prices plummeted by more than $5 over the past week.
Oil prices closed at their lowest level since early June on Tuesday, and traders should be wary of the risk of a prolonged decline.
Given the repeated occurrence of buying support below $65, it's inappropriate to act immediately if Tuesday's low is broken. Instead, $63.70 is worth watching, having served as resistance between May and June. A break below this level would strengthen the sell signal, allowing for a short position to be established with a stop-loss placed just above. $62.00 saw some movement earlier this year, but $60 appears to be a more critical downside target.
The 14-day relative strength index (RSI) is below 50, and the moving average convergence divergence (MACD) is negative and has fallen below the signal line. Both suggest that shorting on rallies may be more effective than buying on dips in the short term.
Of course, if oil prices still fail to effectively fall below $65 under the negative background, the market structure may reverse. Investors can establish long orders above this price level, set the stop loss below, and target the 200-day moving average or the resistance level of $68.44.
At 19:53 Beijing time, WTI crude oil was quoted at US$66.21 per barrel, up 1.61%.
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