On Wednesday (October 8), WTI crude oil futures continued their rebound for the fourth consecutive trading day, recovering from the key support range of $60.40 to $59.91. The rebound brought West Texas Intermediate crude oil close to its 20-day moving average ($62.76).



Given the current overall downtrend, sellers are expected to defend this moving average range. However, if oil prices can sustainably break above the 20-day and 50-day moving averages at $63.22, market momentum will shift to the bulls, potentially leading to a move towards the 100-day moving average at $64.5. On the downside, initial support is seen at $61.52, while the broad support range between $60.40 and $59.91 remains in place.

OPEC+ production increase falls short of expectations, market focuses on oversupply

OPEC+'s decision to increase production by only 137,000 barrels per day in November, the same as October's increase and below market expectations, has provided some support for oil prices. Analysts point out that this production increase is extremely small and will be unlikely to change the short-term supply and demand balance unless inventories continue to increase.

"OPEC+'s choice of a 'minimal production increase' still provides some support for oil prices," said PVM analyst Tamas Varga. However, market concerns about potential oversupply persist, especially with global inventories expected to rise in the coming months. Goldman Sachs predicts that global crude oil inventories will increase by 1.5 million barrels per day in the fourth quarter of this year, and that the daily supply surplus will remain at 2 million barrels by the end of next year.

U.S. crude oil production hits record high, U.S. Energy Information Administration warns oil prices are under pressure

The bearish sentiment in the market was further reinforced by the U.S. Energy Information Administration (EIA) report, which raised its forecast for U.S. crude oil production this year to 13.53 million barrels per day (bpd), a record high, from 13.44 million bpd previously. The increase was due to higher-than-expected crude oil production in July and the accelerated release of production from offshore oil fields in the Gulf of Mexico.

The U.S. Energy Information Administration currently projects that West Texas Intermediate crude oil prices will average $65 per barrel this year, while Brent crude will average $68.64 per barrel, representing year-on-year declines of approximately 15%. The agency also warned that rising global inventories will put significant pressure on oil prices through the end of this year and into next year.

Inventory data in focus, traders brace for short-term volatility

Investors are awaiting official crude oil and gasoline inventory data from the U.S. Energy Information Administration, with expectations for a 400,000-barrel increase in crude oil inventories. On Tuesday, the American Petroleum Institute (API) reported a sharp increase of 2.78 million barrels in crude oil inventories, but saw declines in gasoline and distillate inventories.

Traders remain cautious as the physical market has yet to reflect higher production through continued inventory builds. Any signs of weakening demand or further inventory increases could limit upside for oil prices.


(WTI crude oil daily chart source: Yihuitong)

Market Outlook: Bearish sentiment still dominates

Despite a short-term rebound in oil prices, the overall technical and fundamental outlook remains bearish. Unless West Texas Intermediate crude oil can definitively break above its 50-day moving average, any rebound is likely to be met with a sell-off. Surging US crude oil production, rising global inventories, and a modest increase in OPEC+ production all suggest continued downward pressure on oil prices.