As tensions in the Middle East cool down temporarily, the risk premium in the crude oil market has narrowed significantly. US President Trump announced that Israel and Hamas have reached an agreement on the release of hostages, marking a sign of easing the two-year conflict.

Affected by this, after Brent crude oil rose more than 1% on Wednesday, it quickly fell below $66 a barrel during the Asian session on Thursday, while WTI crude oil consolidated around $62.

Data from the U.S. Energy Information Administration (EIA) showed that national crude oil inventories increased for two consecutive weeks. Although still near seasonal lows, supply pressure is gradually accumulating. At the same time, inventories at the Cushing storage hub declined, and refined oil inventories also decreased, indicating that terminal demand has not yet returned to peak season levels.

OPEC and its allies maintain high production levels, while shale oil production in the Americas continues to grow, further increasing supply pressures. While the Middle East has seen temporary stability, the Ukrainian attack on Russian energy facilities continues to increase supply chain uncertainty.

The International Energy Agency (IEA) pointed out that as non-OPEC production expands, the crude oil market may shift from a tight balance to a slight surplus in the coming months.

Goldman Sachs predicts that the average price of Brent crude oil will fall to $56 a barrel in 2026 because "global supply expansion is far faster than demand growth."

From a technical perspective, the daily chart of WTI crude oil shows that after falling from the mid-September high, the price has continued to run in a downward channel, and the short-term moving averages (MA10 and MA20) have formed an obvious death cross, indicating that the short-term momentum of the market is still bearish.

If WTI falls below the $61 support level, the next target could be $59.50; the upper resistance level lies between $63.80 and $64.20. Declining trading volume suggests a growing wait-and-see attitude among both bulls and bears, suggesting a range-bound trend in the short term.

Editor's opinion:

From a combination of fundamental and technical perspectives, the current weakness in oil prices stems not only from rising inventories and supply expectations, but also reflects market uncertainty about future demand recovery. If the situation in the Middle East remains stable and US inventories remain high, oil prices may continue to face pressure.

We should pay attention to the key support level of WTI at $61. If it falls below this range, it may become the trigger point for a new round of decline. Overall, the market center of gravity is gradually shifting downward, and the short-term rebound space is limited.