Crude oil trading alert: Declining inventories are unlikely to stem the decline in oil prices, and further downside potential may be opening up in the short term.
2026-06-17 09:15:33
International crude oil markets were stable during Asian trading hours on Wednesday, with WTI crude oil prices trading around $75.60 per barrel, ending a sharp sell-off triggered by expectations of a peace agreement. The previous trading day, oil prices fell by nearly 5%, mainly due to market expectations that a temporary peace agreement between the United States and Iran could alleviate months of geopolitical supply risks, thereby increasing global crude oil supply.
The United States and Iran plan to sign a provisional agreement in Switzerland this Friday. Under the framework of the agreement, Iran will receive partial economic support and be allowed to resume its crude oil exports rapidly. Simultaneously, with the agreement officially taking effect, international oil tankers are expected to be able to safely pass through the Strait of Hormuz again. The Strait of Hormuz handles approximately 20% of global seaborne crude oil transport; once shipping fully resumes, the global energy supply shortage will be significantly alleviated.
However, the market still has some doubts about the final effect of the agreement. Some energy industry experts believe that even if a political agreement is reached, it may still take several weeks for maritime transport networks, insurance arrangements, and the energy export system to return to normal levels. In addition, the latest statements from regional armed groups also indicate that uncertainties remain surrounding the final agreement, regional security arrangements, and sanctions, meaning that the geopolitical risk premium will not completely disappear.
Energy consultancy Ritterbusch Associates points out that the market currently places high confidence in the peace plan, but pays insufficient attention to financial reparations, economic restrictions, and the core disputes that have led to the escalation of the conflict. If subsequent negotiations encounter setbacks, the market may re-induce geopolitical risk premiums, thereby providing upward momentum for oil prices.
From the supply side, the market expects that the return of Iranian crude oil to the international market, along with increased export quotas from OPEC and its allies, and increased production from the UAE, will jointly drive global supply growth. The UAE, which previously withdrew from relevant oil production cooperation mechanisms due to conflict, has already increased its crude oil export plans, which may lead to a relatively relaxed global crude oil supply in the coming months.
However, actual inventory data still suggests that short-term supply and demand are not entirely weak. The latest industry data shows that U.S. crude oil inventories fell by approximately 8.3 million barrels last week, indicating that refining demand and short-term supply still show signs of tightening. The significant decline in inventories has limited the downside potential of crude oil prices to some extent, and also suggests that the market may not experience a one-sided downward trend in the short term.
From a technical perspective, the daily chart shows that WTI crude oil's rapid decline and break below several key support levels have shifted the overall trend from high-level consolidation to a bearish structure. Currently, the price is trading below major short-term moving averages, indicating that bears remain in control. The first resistance level to watch is the $77.50 to $78.50 area. If the price fails to regain a foothold in this range, it may continue to seek support near $75 or even $72. Conversely, a break above the $80 mark could signal a reassessment of supply risks, potentially triggering a larger rebound in oil prices.
From a 4-hour chart perspective, WTI crude oil has entered a consolidation phase after a sharp short-term drop, with prices finding temporary support around $75. Short-term technical indicators suggest that bearish momentum has eased somewhat, and the market has a technical need for correction. However, due to the continued dominance of supply expectations in market sentiment, the upside potential may be limited. If oil prices fail to break through the resistance area above $77.50, the short-term trend will remain weak and volatile; once the key support level of $75 is broken, the market may further test the lows around $72.
Editor's Summary:
The international crude oil market is currently shifting from trading based on geopolitical supply shocks to trading based on expectations of supply recovery. The possibility of a US-Iran peace agreement and the reopening of the Strait of Hormuz has significantly reduced the substantial risk premium previously priced in, putting considerable downward pressure on oil prices. However, uncertainties surrounding the implementation of the agreement, changes in the regional situation, and the continued decline in US crude oil inventories may still limit the downside. In the short term, the key to WTI crude oil's price movement lies in the final signing of the peace agreement, the speed of Iranian export recovery, and subsequent inventory data. Amid the interplay between increased supply and resilient demand, oil prices may maintain a highly volatile and volatile pattern.
The United States and Iran plan to sign a provisional agreement in Switzerland this Friday. Under the framework of the agreement, Iran will receive partial economic support and be allowed to resume its crude oil exports rapidly. Simultaneously, with the agreement officially taking effect, international oil tankers are expected to be able to safely pass through the Strait of Hormuz again. The Strait of Hormuz handles approximately 20% of global seaborne crude oil transport; once shipping fully resumes, the global energy supply shortage will be significantly alleviated.
However, the market still has some doubts about the final effect of the agreement. Some energy industry experts believe that even if a political agreement is reached, it may still take several weeks for maritime transport networks, insurance arrangements, and the energy export system to return to normal levels. In addition, the latest statements from regional armed groups also indicate that uncertainties remain surrounding the final agreement, regional security arrangements, and sanctions, meaning that the geopolitical risk premium will not completely disappear.
Energy consultancy Ritterbusch Associates points out that the market currently places high confidence in the peace plan, but pays insufficient attention to financial reparations, economic restrictions, and the core disputes that have led to the escalation of the conflict. If subsequent negotiations encounter setbacks, the market may re-induce geopolitical risk premiums, thereby providing upward momentum for oil prices.
From the supply side, the market expects that the return of Iranian crude oil to the international market, along with increased export quotas from OPEC and its allies, and increased production from the UAE, will jointly drive global supply growth. The UAE, which previously withdrew from relevant oil production cooperation mechanisms due to conflict, has already increased its crude oil export plans, which may lead to a relatively relaxed global crude oil supply in the coming months.
However, actual inventory data still suggests that short-term supply and demand are not entirely weak. The latest industry data shows that U.S. crude oil inventories fell by approximately 8.3 million barrels last week, indicating that refining demand and short-term supply still show signs of tightening. The significant decline in inventories has limited the downside potential of crude oil prices to some extent, and also suggests that the market may not experience a one-sided downward trend in the short term.
From a technical perspective, the daily chart shows that WTI crude oil's rapid decline and break below several key support levels have shifted the overall trend from high-level consolidation to a bearish structure. Currently, the price is trading below major short-term moving averages, indicating that bears remain in control. The first resistance level to watch is the $77.50 to $78.50 area. If the price fails to regain a foothold in this range, it may continue to seek support near $75 or even $72. Conversely, a break above the $80 mark could signal a reassessment of supply risks, potentially triggering a larger rebound in oil prices.
From a 4-hour chart perspective, WTI crude oil has entered a consolidation phase after a sharp short-term drop, with prices finding temporary support around $75. Short-term technical indicators suggest that bearish momentum has eased somewhat, and the market has a technical need for correction. However, due to the continued dominance of supply expectations in market sentiment, the upside potential may be limited. If oil prices fail to break through the resistance area above $77.50, the short-term trend will remain weak and volatile; once the key support level of $75 is broken, the market may further test the lows around $72.
Editor's Summary:
The international crude oil market is currently shifting from trading based on geopolitical supply shocks to trading based on expectations of supply recovery. The possibility of a US-Iran peace agreement and the reopening of the Strait of Hormuz has significantly reduced the substantial risk premium previously priced in, putting considerable downward pressure on oil prices. However, uncertainties surrounding the implementation of the agreement, changes in the regional situation, and the continued decline in US crude oil inventories may still limit the downside. In the short term, the key to WTI crude oil's price movement lies in the final signing of the peace agreement, the speed of Iranian export recovery, and subsequent inventory data. Amid the interplay between increased supply and resilient demand, oil prices may maintain a highly volatile and volatile pattern.
- 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.
