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Oil markets face pressure as rising supply and weakening demand outweigh short-term geopolitical headlines, keeping traders focused on fundamentals like inventories and production trends.
Market shifts focus to oversupply risks
Oil futures fell further in early Friday trading, extending the previous session’s decline as market focus shifted back to core supply and demand fundamentals.
Brent crude slipped 0.6% to $65.95 per barrel, while WTI dropped 0.7% to $61.95. Growing concerns over a potential surplus are weighing on sentiment, particularly as demand from the United States shows further signs of slowing.
The International Energy Agency (IEA) this week revised its projections, now expecting global supply growth to outpace earlier estimates.
At the same time, OPEC+ remains committed to planned production increases, even as signs of demand weakness emerge.
Adding to the pressure, the US – the world’s largest oil consumer – reported a second consecutive weekly build in crude inventories, raising fresh concerns about oversupply in the near term.
Demand softens despite geopolitical tensions
Although tensions in the Middle East and renewed sanctions rhetoric initially supported oil, the geopolitical risk premium is fading.
Earlier in the week, prices briefly spiked after President Trump urged the EU to impose tariffs on Chinese and Indian goods as part of broader efforts to increase pressure on Russia. However, the boost quickly reversed as the market refocused on fundamentals.
The muted response to sanctions headlines highlights traders’ view that current supply dynamics carry more weight than geopolitical disruptions.
With US demand weakening and stockpiles rising, the potential for oversupply is emerging as a more dominant driver of price direction than the risk of conflict or trade restrictions.
Technical analysis
WTI crude is currently trading at $62.33, up 0.17% on the day, though overall momentum remains subdued after a turbulent year.
Picture: Brent crude slips to $65.95, consolidating between $59.00 support and $67.00 resistance on the VT Markets app.
The price chart shows crude rebounding from April’s low of $55.12, peaking at $77.90 in July before retreating to the low $60s.
Moving averages (5, 10, 30) are now converging, reflecting indecision, while the MACD hovers flat around the zero line, signalling weak momentum.
Immediate support is identified near $59.00, while resistance lies around $67.00, with July’s high of $77.90 marking the next major ceiling.
Unless a breakout occurs, oil prices are likely to consolidate within this range, with traders closely monitoring supply-demand trends and potential shifts from the Federal Reserve’s interest rate policy.
Cautious forecast
In the short term, crude oil is expected to remain under pressure between $61.00 and $64.00, as rising inventories and a stronger supply outlook outweigh geopolitical headlines.
The IEA’s revised forecast and persistent US stock builds suggest that upside potential remains capped, even in the face of sanctions or Middle East flashpoints.
Over the medium term, if demand continues to soften while OPEC+ holds to its production strategy, prices could gradually drift towards the $59.00–60.00 range.
A sharper slowdown in US consumption could accelerate losses unless offset by production cuts or unexpected supply disruptions.
Looking ahead, traders should keep an eye on next week’s EIA inventory report and OPEC+ statements for any signs of a shift in tone. Until then, upside rallies may remain limited while downside risks persist.
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