Oil will take center stage next week with the OPEC+ meeting. An announcement is expected to reveal an additional 144,000 barrels per day returning to the market. This trend is likely to persist until October, as oil prices have recently risen to their highest levels since March, unless concerns about conflict with Iran arise. There are worries about inventory levels rising this autumn and winter before U.S. shale production starts to decline. If this happens, it could lead to a surplus that lasts until 2026, making crude oil a more attractive option as U.S. shale faces difficulties. From a technical viewpoint, the previously mentioned inverted head-and-shoulders pattern has returned to its support level. While the overall outlook on oil remains cautious, improving market sentiment and a weaker U.S. dollar could drive prices higher. However, caution is needed ahead of the OPEC meeting on July 6. Oil markets have been aligning more closely with expected changes in supply, largely influenced by the upcoming OPEC+ announcement. The group plans to gradually increase production by adding 144,000 barrels per day over several months. This move signifies a broader strategy for controlled supply recovery. Prices have already climbed significantly, hitting their highest point since early spring. This increase reflects both anticipation and traders adjusting their positions ahead of the formal announcement. Geopolitical risks, particularly related to Iran, remain unpredictable and could affect pricing. Even though these risks haven’t intensified, their presence continues to impact market participants. Traders may be preparing for possible disruptions, which helps explain some of the price support we’ve observed. There’s also a seasonal factor to consider. U.S. crude inventories might start to rise as demand slows later in the year. This creates a balancing situation: if supplies aren’t absorbed, the excess could extend into next year, putting downward pressure on prices unless shale output decreases. While production cuts are not guaranteed, tight profit margins and reduced investments might limit production growth well into 2025. From a charting standpoint, the return of the inverted head-and-shoulders pattern and its bounce from the support level warrant observation. Historically, this formation suggests reaccumulation rather than reversal, indicating the recent price increase may continue, at least for now. Still, caution prevails, and overall trading sentiment remains skeptical. Support is building for oil, partially due to a weakening dollar. Lower expectations for interest rates in the U.S. are putting pressure on the dollar, making dollar-denominated commodities cheaper worldwide. This shift typically attracts speculative investment, which we are starting to notice. However, approaching the July 6 meeting requires careful planning. If the announcement meets expectations, the market may have already priced in the news, leaving little room for immediate increases. If surprises emerge, whether in direction or wording, volatility could increase. For those taking risks in the derivatives market, the current situation provides opportunities for leverage, but timing entry and exit could be challenging. The technical support offers a way to manage downside risks, but any change in the supply outlook—due to policy shifts, demand changes, or unexpected outages—could quickly alter the situation. It’s wise to be patient and monitor forward spreads rather than relying on broad predictions. A wider contango later in the year would signal excess inventory, while a shift into backwardation would indicate stronger real-world demand than currently expected. Both scenarios are tradable, but it’s essential to focus and reduce uncertainty in models as we approach next week’s decision. The options market shows that traders are slightly favoring protections on the upside. This strategy aligns with a belief that while outright price rallies may be limited, there’s more potential for price increases than decreases—especially if production adjustments happen more slowly than anticipated. Maintaining risk controls will be crucial in the coming days. Being flexible and ready to react may be more beneficial than being fixed on specific market outcomes.

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