Oil prices are under pressure as traders grow cautious ahead of the upcoming OPEC+ meeting. Expectations of a possible supply increase, combined with weaker demand and rising inventories, have weighed on sentiment and capped upward momentum.

Oil dips on OPEC+ risk

Crude oil prices edged lower on Tuesday morning, as market participants turned cautious ahead of the upcoming OPEC+ meeting scheduled for 6 July.

West Texas Intermediate (WTI) crude slipped by 0.2% to trade at $64.96 per barrel, while Brent crude eased to $66.62 per barrel.

The subdued sentiment followed reports suggesting that key OPEC+ members are considering an additional output increase of 411,000 barrels per day (bpd) for August.

Although not yet confirmed, the potential for further supply growth is putting downward pressure on oil prices – especially as demand forecasts soften and global inventories build.

Mixed supply signals cap bullish momentum

The oil market remains caught between opposing forces. On one hand, improving risk appetite continues to lend support to commodities.

On the other, rising US crude stockpiles and the likelihood of increased OPEC+ output have curbed upward momentum.

Analysts at ANZ Research noted that market concerns are now centred on the pace of supply hikes from the alliance, particularly with demand across Asia showing signs of levelling off.

Persistently weak economic indicators from China and narrowing global refinery margins have further dampened the outlook for a balanced oil market.

Until the outcome of the OPEC+ meeting is confirmed, traders are expected to remain cautious.

A sustained break above the $65.50 resistance level may require either a surprise policy shift from producers or stronger global demand signals.

Conversely, a drop below $64.50 could open the door to further downside toward $63.70.

Technical analysis: Key levels to watch

WTI crude is currently under pressure, having failed to reclaim the recent high of $66.08.

The price has since retreated into a narrow consolidation range, hovering just below the $65.00 psychological mark and currently sitting around $64.85.

From a technical perspective, the market is showing signs of indecision. Price action is consolidating between key support at $64.51 and resistance at $65.10.

Picture: Oil stalls under $65 as momentum fades, as seen on the VT Markets app.

Short-term moving averages (5, 10, and 30-day) are flattening, suggesting weakening momentum.

The MACD has crossed below its signal line, and the histogram is alternating between red and green—further evidence of a lack of clear direction.

Should WTI break below the $64.51 support zone, it could pave the way for a move towards $64.00.

On the upside, bulls would need a firm close above $65.10 to retest the $65.50 level and potentially extend gains.

The 6 July OPEC+ meeting remains the key catalyst. Confirmation of an additional supply hike could pressure prices further, while a more cautious approach or hints at future tapering might provide support and lift oil back toward the $65.50 area.

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