WTI Texas crude oil futures (OIL.WTI) are down nearly 1% today, testing the $70 per barrel level. One of the main factors driving the sell-off is growing concern over increasing global oil production, combined with uncertainty about the state of the global economy, including that of the United States. Inflationary pressure, along with weaker consumption data, may lead markets to conclude that the U.S. economy is losing momentum, potentially negatively impacting demand for WTI crude. An increase in supply typically exerts downward pressure on commodity prices.
- On Saturday, Iraq announced that it is preparing to end the sanctions period on oil exports, which could increase global production by 185,000 barrels per day.
- Peace talks between the United States and Russia regarding the ongoing three-year-long conflict in Ukraine are currently underway. Statements from the U.S. administration have given markets hope for an end to the conflict in Eastern Europe.
- Following recent comments from Trump, speculation has risen that some sanctions on Russian oil exports could be lifted, further boosting global supply.
- The United States is likely to focus on expanding hydraulic fracturing production, aiming to strengthen its position as one of the world’s leading oil producers. This approach would contradict OPEC’s previous efforts to curb overproduction in order to stabilize prices.
These developments have heightened concerns about a potential oversupply, especially since oil demand has not shown significant growth. Global economic growth forecasts for 2025 have been revised downward, suggesting that demand may remain stable or even decline. This scenario favors supply, which could further reinforce the downward trend in WTI prices.For OIL.WTI (H1 interval), key support appears to be located around the psychological barrier of $70 and $68 per barrel, as defined by the local lows of 2024.
Source: xStation5
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