Market Insights > Daily Market Analysis

7 July 2025,05:46

Daily Market Analysis

Oil Falls as OPEC+ Surprises With Output Hike

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7 July 2025, 05:46

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Key Takeaways:
*Oil slips as OPEC+ lifts output above forecasts: Saudi-led hike shifts focus from price support to market share.

*Demand concerns grow amid weak China data, U.S. builds: Rising inventories and soft imports raise consumption doubts.

Market Summary:

U.S. crude oil prices extended their decline this week, pressured by a sharper-than-expected production boost from OPEC+ and a growing sense of demand fragility across key global markets. The alliance’s decision to raise August output by 548,000 barrels per day—well above the anticipated 411,000 bpd—signaled a strategic shift by Saudi Arabia and its partners toward defending market share rather than stabilizing prices.

The announcement comes as geopolitical risk premiums fade following a tentative ceasefire agreement between Israel and Iran, alongside improving diplomatic channels between the U.S. and Saudi Arabia. This has removed one of the key bullish pillars underpinning recent price gains, leaving crude increasingly vulnerable to structural oversupply.

At the same time, demand signals remain mixed. China’s year-to-date import growth has been tepid, with signs that recent buying may reflect opportunistic stockpiling rather than sustainable consumption. Meanwhile, U.S. crude inventories recorded their largest build in three months, raising fresh concerns about oversupply just as global macroeconomic uncertainty intensifies.

Traders are also closely watching the August 1 U.S. tariff deadline, with the threat of sweeping levies on countries lacking trade deals—such as Vietnam and Thailand—posing downside risk to global growth and, by extension, energy demand. With refined product demand already under pressure, any escalation could further suppress crude buying appetite across Asia and beyond.

Looking ahead, oil markets face a precarious balance. While Saudi Arabia has maintained elevated official selling prices to Asia—suggesting confidence in regional demand—compliance within the broader OPEC+ block remains uneven. Unless demand rebounds meaningfully or the group reins in its production ambitions, downside price pressure could intensify.

In the near term, WTI’s trajectory will depend on a trio of factors: follow-through on OPEC+ production plans, global demand resilience (especially out of China), and clarity on U.S. trade policy. Until then, oil remains exposed to macro headwinds, with downside risks mounting as supply accelerates into a softening demand backdrop.

USOIL, H4

Crude oil prices are consolidating just above the $66 handle after a steep correction from late-June highs, with WTI attempting to find a base following its breakdown below the prior ascending channel. The recovery from $63 levels has so far lacked follow-through, as bulls remain cautious amid lingering macro and supply-side headwinds.

Technically, the RSI has recovered modestly from oversold territory but remains subdued at 47, reflecting weak momentum. While the indicator has not yet confirmed a bullish reversal, its stabilization above 40 offers a tentative sign that selling pressure may be easing.

However, the MACD signal remains mixed. Although the histogram has turned marginally positive, the MACD line remains below the signal line, suggesting that upside momentum has yet to fully materialize. A confirmed crossover above the zero line would be required to signal broader bullish traction.

For now, USOIL remains in a holding pattern following its aggressive correction, with technicals pointing to a fragile consolidation phase. A decisive break above the $67–$70 range is needed to reignite bullish momentum, while failure to hold $64 may tilt the balance further toward the bears.

Resistance Levels: 67.15, 71.30

Support Levels: 64.30, 60.15

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