10 June 2025,05:55
Daily Market Analysis
10 June 2025, 05:55
Key Takeaways:
*WTI’s rally remains fragile as soft Chinese demand signals and rising U.S. fuel inventories clash with optimism over U.S.–China trade talks.
*OPEC+ production discipline is eroding, with underperformance in May expected to shift toward more aggressive supply increases by late summer.
WTI crude prices eked out modest gains this week, lifted by a weaker dollar and optimism over U.S.–China trade talks in London, but the rally remains tenuous as global demand signals continue to deteriorate. While prices briefly tested seven-week highs above $65.29/bbl, the advance lacked conviction amid soft Chinese data and the looming spectre of rising OPEC+ output.
China’s May crude imports dropped to a four-month low due to seasonal refinery maintenance, while export growth cooled and factory-gate deflation deepened—underscoring persistent fragility in the world’s second-largest economy. These signs of demand weakness come as OPEC+ maintains its strategy of gradually increasing production, with a 150,000 bpd rise in May that fell short of planned targets but still reinforces the group’s pivot toward regaining market share. Analysts caution that sharper hikes could arrive in Q3, particularly if Saudi Arabia and its Gulf allies ramp up underutilized capacity.
While trade talks in London sparked hopes of tariff rollbacks and a potential demand boost, concrete breakthroughs remain elusive. Meanwhile, U.S. gasoline and distillate inventories posted larger-than-expected builds, adding to concerns about oversupply just as the Northern Hemisphere enters peak driving season. Futures markets are beginning to reflect these worries, with parts of the forward curve edging toward contango—a signal of rising storage pressure.
With OPEC+ poised to review output targets at its July 6 meeting and Iran-U.S. tensions simmering in the background, the market remains on edge. But for now, fundamentals skew bearish: production is creeping higher, inventories are bloated, and demand signals are too fragile to support sustained upside.
WTI crude oil extends its breakout above the $62.30–$63.90 resistance zone, with bulls now testing the $66.30 ceiling—a level last seen during May’s consolidation phase. This breakout from days-long sideways structure signals renewed bullish momentum, though upside follow-through may face fatigue as key resistance clusters emerge.
Momentum signals are positive but increasingly stretched. The Relative Strength Index (RSI) has surged to 70—just shy of overbought territory—reflecting solid bullish sentiment but also warning of potential near-term exhaustion. Meanwhile, the MACD has crossed above the signal line with increasing histogram bars, confirming upward momentum is building, though the recent gains may soon invite profit-taking unless fresh catalysts emerge.
Price reaction near $66.30 will be pivotal in determining whether this is the start of a larger bullish leg or another temporary spike within a broader consolidation range.
Resistance Levels: 66.30, 68.70
Support Levels: 63.65, 62.10
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