WTI Crude Oil prices have fallen below $67.00, settling around $66.80 per barrel, which marks an intraday loss of nearly 2%. This decline is driven by supply issues and lowered expectations for demand. The US has imposed a 50% tariff on Copper and is considering tariffs on Brazilian imports, raising concerns about global economic growth and commodity demand. Additionally, the US Energy Information Administration reported that crude inventories unexpectedly increased by 7.07 million barrels, contrary to the forecasted decrease of 2 million barrels.

Geopolitical Tensions Affect Oil Flow

Tensions are rising due to attacks by Yemen’s Houthi rebels in the Red Sea, which threaten crucial shipping lanes and could disrupt Crude Oil supplies. Recent incidents involving Greek and Liberian vessels may lead to higher insurance costs and influence prices. OPEC+ announced an increase of 548,000 barrels per day in August, despite ongoing disruptions, which is affecting market prices. Technically, WTI is facing resistance around $67.00, with support near $64.97 and potential downside risks to $64.18. The Relative Strength Index stands at 49, showing neutral momentum, while the Commodity Channel Index at -35 suggests a mildly bearish sentiment. WTI Oil is a “light” and “sweet” Crude Oil valued for its quality, and its price is influenced by supply and demand, geopolitical events, and OPEC’s decisions.

Economic and Market Pressures

With West Texas Intermediate prices dropping below $67.00 to around $66.80, the market is experiencing familiar pressures, marked by weak demand expectations and an unexpected supply increase. An almost 2% intraday loss suggests a cautious mood among traders, indicating that a longer cycle may be underway rather than a brief correction. The surprising inventory increase of over 7 million barrels contradicts previous expectations and undermines the support many had been counting on. When a decrease was anticipated, only to see a sharp rise instead, market sentiment quickly shifted from optimism to caution. External pressures are prompting traders to reassess their risk exposure. The recently imposed 50% tariff on Copper by the US and talks of similar tariffs on Brazilian goods challenge assumptions about global growth. Slower growth typically leads to reduced energy consumption forecasts, which directly impacts oil demand. While these tariffs do not target crude oil directly, their effects are felt across the market. Instability in the Red Sea complicates global supply chains. Attacks by Houthi militants threaten shipping routes essential for oil transportation. With Greek and Liberian tankers affected, increased freight rates and potential delivery delays may arise. Higher insurance costs on critical shipping routes might deter some operators, especially for trips through key chokepoints. OPEC+, which has confirmed an unexpected increase of 548,000 barrels per day starting in August, has shifted market expectations during a time of inconsistent demand. Normally, such increases would not raise concerns if the economy were robust; however, the current climate does not support that view. This decision has heightened worries about oversupply, especially after significant inventory changes. From a technical perspective, resistance remains strong around $67.00, while support at $64.97 has been dependable. If prices drop further, the $64.18 level may be tested. Current indicators show a lack of clear direction: the RSI at 49 is neutral, and the CCI at -35 indicates a slight bearish sentiment without needing immediate action but suggests limited bullish enthusiasm. In summary, when prices linger below key levels, it’s essential to rethink what is priced in versus market fears. Prices reflect not just market conditions but also the sentiment of participants. There is no apparent catalyst driving prices up today. When supply increases clash with weak demand and market participants grapple with negative data and trade tensions, caution is often preferred over bold moves. This environment suggests watching from the sidelines or cautiously exploring downside risks, especially in the short term. Create your live VT Markets account and start trading now.

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