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Oil markets have faced a choppy week, with hopes for stronger global demand clashing against rising supply and lingering uncertainties. This analysis explores the key factors shaping sentiment and what they could mean for oil prices in the days ahead.
Oil prices claw back losses but remain under pressure
After dropping by over 3% earlier in the week, oil prices managed to regain some ground on Wednesday, with WTI crude stabilising just below the $67 per barrel mark.
Despite remaining firmly negative on the week, the modest rebound offered a short-lived relief for traders navigating a turbulent July.
Support came from increased seasonal fuel demand in the US and encouraging economic data from China, although the foundation remains fragile.
The recovery followed a report showing a rise in US petrol consumption, largely driven by strong summer travel activity.
This uptick in domestic demand, combined with China’s better-than-expected Q2 GDP growth, temporarily soothed concerns that the world’s top two energy consumers were losing appetite for crude.
While these factors encouraged some cautious buying, lifting WTI from a session low of $66.21, the momentum behind the rebound was limited.
Market participants remained cautious ahead of further inventory reports and wider global economic indicators.
Technical analysis
Crude prices are attempting to recover from a steep decline—from above $69 down to around $66.20—fuelled by fresh global growth concerns and a strengthening US dollar.
Technical charts show a sustained downward trend, bottoming out at $66.218 before bargain hunters began to test the waters.
Picture: Oil struggles to bounce after tumbling nearly 3%, pressured by weak China data and rising US stockpiles, as seen on the VT Markets app.
The MACD is beginning to level out just below the zero line, hinting at a potential momentum shift, although a decisive bullish crossover is yet to appear.
Meanwhile, the convergence of moving averages suggests the selling pressure may be easing, at least temporarily.
However, resistance remains strong at the psychologically important $67 level and again near $67.60.
For any significant recovery to take shape, buyers will need to break above these key zones.
Global demand hopes meet rising supply reality
From a macroeconomic perspective, there is still a valid case for cautious optimism. The latest monthly update from OPEC+ presented a more upbeat view for the second half of 2025, citing improved growth prospects in India, Brazil, and China as key drivers for increased oil demand.
This added to ongoing recovery narratives from the US and EU, bolstering the view that global demand could soon catch up with supply.
China’s economic data surprised to the upside. Despite continued concerns around trade tensions and structural headwinds, the country managed to exceed growth expectations in the second quarter—providing a confidence boost to energy markets after weeks of uncertainty caused by weak import figures.
Still, not all news favoured the bulls. The American Petroleum Institute (API) reported a massive 19.1 million-barrel surge in crude oil inventories—the largest weekly build on record.
This unexpected increase dealt a blow to those anticipating stockpile drawdowns during the height of the US driving season.
In the near term, it appears supply is outpacing demand, leaving the market in a state of imbalance.
While long-term outlooks remain encouraging, immediate oversupply continues to weigh on sentiment.
Geopolitical risks stir, but no major shake-up yet
Geopolitical developments also influenced oil markets this week. A drone attack in Iraq briefly halted production at the Sarsang field, injecting a minor risk premium into oil prices.
However, broader fears of a major supply disruption were tempered by former President Trump’s diplomatic move—issuing a 50-day ultimatum to Russia rather than opting for immediate sanctions.
This decision eased pressure on Russian oil exports, at least for the time being.
The result is a conflicted market environment, where longer-term bullish drivers are offset by bearish short-term fundamentals.
WTI crude remains fragile and acutely sensitive to new data releases, with sentiment swinging wildly from headline to headline.
Unless a clear technical breakout occurs or a major geopolitical event disrupts supply chains, oil prices are likely to remain range-bound heading into the weekend.
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