Crude oil trading alert: Oil prices unexpectedly rebounded after consecutive declines; geopolitical risks may be the last straw for bulls.
2025-11-07 10:42:43
On Friday (November 7), West Texas Intermediate (WTI) crude oil rebounded slightly to around $59.78 per barrel, after falling for four consecutive trading days. Oil prices recovered some lost ground, driven by geopolitical risks. However, with growing market concerns about oversupply, the potential upside for oil prices may be limited.
US crude oil rose for the second consecutive day by about 0.6% to $59.78 per barrel; Brent crude oil rose for the second consecutive day by about 0.4% to around $63.70 per barrel.
A recent report from the U.S. Energy Information Administration (EIA) shows an unexpected surge in U.S. crude oil inventories. For the week ending October 31, crude oil inventories increased by 5.2 million barrels, far exceeding the expected increase of 1.8 million barrels. This data exacerbates market concerns about continued ample crude oil supply, while global demand continues to show signs of weakness.
Earlier this week, the American Petroleum Institute (API) reported that U.S. crude oil inventories rose by 6.5 million barrels in the week ending October 31, compared with a decrease of 4 million barrels in the previous week.
Meanwhile, macroeconomic data from major economies remained weak. The US Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI) remained in contraction territory at 48.7. In the Eurozone, while the HCOB Manufacturing PMI rose slightly to 50, it still indicated sluggish demand.
However, recent reports that the US military may soon take military action against Venezuela have provided some support for oil prices. Venezuela is the world's 12th largest oil producer. Furthermore, reduced Russian crude oil exports may also push up prices. According to two industry sources and ship tracking data from the London Stock Exchange Group, the Russian Black Sea port of Tuapse has suspended fuel exports and its refineries have halted crude oil processing following the Ukrainian drone attack on its infrastructure last Sunday.
The Volgograd refinery in Russia, operated by Lukoil, has ceased operations following a Ukrainian drone attack. The attack damaged key processing units, representing approximately one-fifth of the plant's total capacity. While the incident highlights ongoing risks to the region's energy infrastructure, it has not yet caused serious disruption to Russian crude oil exports. Commerzbank notes that exports remain strong at approximately 3.56 million barrels per day.
Adding to the bearish tone, the Organization of the Petroleum Exporting Countries (OPEC+) recently announced a slight increase in production of 137,000 barrels per day in December, while also stating that to avoid potential oversupply, it will suspend further production increases in the first quarter of 2026. ING analysts pointed out that a "peak oversupply" is expected in the market early next year, although supply uncertainties related to sanctions and regional tensions may continue to put pressure on oil prices.
Against this backdrop, expectations of a global economic slowdown, coupled with U.S. crude oil production remaining near record highs of 13.65 million barrels per day, according to data from the U.S. Energy Information Administration, are jointly putting pressure on oil prices. Unless market risk sentiment stabilizes or a major supply disruption occurs, oil prices are likely to remain under pressure in the short term.
Technical Analysis: Crude Oil Returns to Trading Range
US crude oil prices had previously broken below the 59.64-61.94 trading range, but have now rebounded back into that range, easing short-term bearish pressure.
The daily chart's oscillator is in negative territory, indicating continued bearish pressure and potentially limited upside potential.
On the downside, if oil prices fall below the psychological level of $59.00, it indicates increased selling pressure and could pave the way for a test of the low of $55.96 on October 20.
On the upside, oil prices need to continue rising above Thursday's high of $60.51 to provide momentum for further gains and push prices above the upper boundary of the trading range around $61.94.
(US crude oil daily chart, source: FX678)
At 10:42 Beijing time, US crude oil futures were trading at $59.76 per barrel.
US crude oil rose for the second consecutive day by about 0.6% to $59.78 per barrel; Brent crude oil rose for the second consecutive day by about 0.4% to around $63.70 per barrel.
A recent report from the U.S. Energy Information Administration (EIA) shows an unexpected surge in U.S. crude oil inventories. For the week ending October 31, crude oil inventories increased by 5.2 million barrels, far exceeding the expected increase of 1.8 million barrels. This data exacerbates market concerns about continued ample crude oil supply, while global demand continues to show signs of weakness.
Earlier this week, the American Petroleum Institute (API) reported that U.S. crude oil inventories rose by 6.5 million barrels in the week ending October 31, compared with a decrease of 4 million barrels in the previous week.
Meanwhile, macroeconomic data from major economies remained weak. The US Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI) remained in contraction territory at 48.7. In the Eurozone, while the HCOB Manufacturing PMI rose slightly to 50, it still indicated sluggish demand.
However, recent reports that the US military may soon take military action against Venezuela have provided some support for oil prices. Venezuela is the world's 12th largest oil producer. Furthermore, reduced Russian crude oil exports may also push up prices. According to two industry sources and ship tracking data from the London Stock Exchange Group, the Russian Black Sea port of Tuapse has suspended fuel exports and its refineries have halted crude oil processing following the Ukrainian drone attack on its infrastructure last Sunday.
The Volgograd refinery in Russia, operated by Lukoil, has ceased operations following a Ukrainian drone attack. The attack damaged key processing units, representing approximately one-fifth of the plant's total capacity. While the incident highlights ongoing risks to the region's energy infrastructure, it has not yet caused serious disruption to Russian crude oil exports. Commerzbank notes that exports remain strong at approximately 3.56 million barrels per day.
Adding to the bearish tone, the Organization of the Petroleum Exporting Countries (OPEC+) recently announced a slight increase in production of 137,000 barrels per day in December, while also stating that to avoid potential oversupply, it will suspend further production increases in the first quarter of 2026. ING analysts pointed out that a "peak oversupply" is expected in the market early next year, although supply uncertainties related to sanctions and regional tensions may continue to put pressure on oil prices.
Against this backdrop, expectations of a global economic slowdown, coupled with U.S. crude oil production remaining near record highs of 13.65 million barrels per day, according to data from the U.S. Energy Information Administration, are jointly putting pressure on oil prices. Unless market risk sentiment stabilizes or a major supply disruption occurs, oil prices are likely to remain under pressure in the short term.
Technical Analysis: Crude Oil Returns to Trading Range
US crude oil prices had previously broken below the 59.64-61.94 trading range, but have now rebounded back into that range, easing short-term bearish pressure.
The daily chart's oscillator is in negative territory, indicating continued bearish pressure and potentially limited upside potential.
On the downside, if oil prices fall below the psychological level of $59.00, it indicates increased selling pressure and could pave the way for a test of the low of $55.96 on October 20.
On the upside, oil prices need to continue rising above Thursday's high of $60.51 to provide momentum for further gains and push prices above the upper boundary of the trading range around $61.94.
(US crude oil daily chart, source: FX678)
At 10:42 Beijing time, US crude oil futures were trading at $59.76 per barrel.
- 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.
