6 August 2025,06:46
Daily Market Analysis
6 August 2025, 06:46
Key Takeaways:
*Surplus risks intensify as OPEC+ lifts production amid weak macro backdrop
*Trump’s tariff escalation raises trade friction, but supply remains uninterrupted
*Oil prices hover near multi-week lows as market awaits clarity on sanctions and demand
Market Summary:
Crude oil prices remain under pressure as markets grapple with a growing imbalance between supply and demand. OPEC+ announced a second consecutive output increase of 547,000 barrels per day starting in September, accelerating the rollback of earlier supply cuts despite fragile demand signals. Brent and WTI prices have both fallen to five-week lows, reflecting concerns that the market could swing into surplus by late 2024.
Geopolitical risks continue to stir volatility, but with limited near-term supply disruption. U.S. President Donald Trump’s latest threat to impose up to 25% tariffs on Indian exports—citing New Delhi’s continued purchases of discounted Russian crude—has escalated tensions with India, now Russia’s largest oil customer. While the Kremlin is reportedly weighing minor concessions to avoid secondary sanctions, traders remain skeptical about any material drop in Russian flows, particularly to India and China.
On the demand side, mixed global data is compounding the bearish tone. U.S. ISM Services PMI showed stagnation at 50.1, while China’s consumption trends remain uneven amid ongoing economic rebalancing. JPMorgan has flagged a “high” recession risk for the U.S., adding to fears that global growth could slow further just as supply ramps up.
With Trump’s August 8 deadline for a Russia-Ukraine ceasefire approaching and uncertainty around his proposed sanctions, crude markets remain highly sensitive to headlines. Until there is clarity on demand stabilization or supply restraint, oil is likely to remain capped below $70, with risks of deeper losses if inventory builds accelerate or trade actions materialize.
Technical Analysis
USOIL is holding near the $65.00 region after repeatedly testing the $64.50–$65.50 key horizontal support zone. Price action has shown multiple rebounds from this area, suggesting strong underlying demand and the potential formation of a triple bottom reversal pattern. The bounce has brought prices back toward the 50-period moving average near $66.75, while the 100-period moving average at $67.35 acts as the next immediate resistance level.
Momentum indicators offer mixed signals. The Relative Strength Index (RSI) has recovered modestly to 35 after brushing near oversold territory, implying that downside pressure is easing but buyers still lack full control. Meanwhile, the MACD shows bearish momentum losing traction, though no bullish crossover has been confirmed yet, leaving price direction vulnerable to near-term catalysts.
Overall, while USOIL remains rangebound, the repeated defense of the $64.50 zone offers early signs of a potential base forming. Traders may look for either a breakout above the moving averages for confirmation of a recovery or a retest of support for potential long entries with defined risk parameters.
Resistance Levels: 66.66, 68.60
Support Levels: 64.50, 62.70
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