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5 June 2025,03:43

Daily Market Analysis

Oil Slumps as Saudi Output Plans and Price Cuts Undermine Market Sentiment

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5 June 2025, 03:43

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Key Takeaways:

*Saudi Arabia signals another major production increase, adding to supply concerns

*Aramco cuts official selling prices for Asia, reinforcing bearish outlook

*Market sentiment weighs on oil as OPEC+ sticks to aggressive output hikes

Market Summary:

Oil prices retreated sharply on Thursday after Saudi Arabia signaled plans for another significant production increase, heightening expectations of a supply glut. The move comes as OPEC+ continues to expand output for the third consecutive month in a bid to protect market share, despite ongoing concerns about global demand resilience.

Further dampening sentiment, Saudi Aramco reduced its official selling prices (OSPs) to Asia, though the cut was smaller than the 35-cents-a-barrel reduction expected by refiners and traders. Nevertheless, the decision signals weaker regional demand and reinforces bearish pressures.

The combination of supply-side expansion and softer price signals from the world’s largest oil exporter has prompted market participants to revise down their near-term oil outlook, adding weight to already cautious sentiment amid global macroeconomic uncertainties.

Technical Analysis

USOIL, H4

Oil prices are trending lower after failing to breach resistance and are now testing key support at 62.05. MACD indicates rising bearish momentum, while RSI has slipped to 52 from overbought territory, suggesting potential for further declines.

If bearish momentum persists and prices break below 62.05, downside extension toward 60.30 is likely. On the flip side, a bounce may trigger consolidation between 62.05 and 63.90.

Resistance Levels: 63.90, 65.30
Support Levels: 62.05, 60.30

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