WTI outlook: Oil prices correct higher, yet the bears wait just around the corner

Oil prices seem to have corrected a bit higher over the past two days and today we are to discuss the main issues that seem to be tantalising oil traders currently and conclude the report with a technical analysis of WTI’s daily chart.

The US Oil market remains loose

The data in the US oil market tend to imply the presence of a relative slack as the rise in the number of active US oil rigs was halted suggesting some hesitation in the demand side of the US oil market. Furthermore, API reported a substantial increase of US crude oil inventories reversing last week’s drawdown while EIA released also a narrower than expected yet still a rise of US crude oil stockpiles. All indicators tend to align in pointing out that aggregated demand in the US oil market was not able to catch up with production levels and should such signals intensify in the coming week, we may see them having a bearish effect on oil prices.

US Trade wars clip Oil demand outlook

It seems that the US-led trade wars are about to clip the international oil demand outlook, or at least that’s what the International Energy Agency (IEA) is saying in its Oil Market Report for March 2025. IEA also seems pessimistic for oil demand stemming from China as in an article published by the Agency, it sees Chinese demand reaching a plateau. Overall further signs of an easing demand side for the international oil market could continue weighing on oil prices. Thus we highlight the US trade wars as a key determinant of oil prices. We adopt the notion that the trade wars could decrease economic activity and thus ease oil demand. Any signs of escalating trading tensions or easing of growth in the global economy could weigh on black gold’s price on a fundamental level.

OPEC+’s unwinding of production cuts

On the flip side, OPEC+ seems to maintain its demand outlook which could be considered a positive for oil prices. Yet we also note the increased oil production from Kazakhstan and expect the oil cartel to start unwinding its oil production cuts, as it believes that oil demand remains steady. Further signals of increased oil production by OPEC members could weigh on oil prices as they would ease the strain of oil supply chains by increasing oil supply. 

Overall fundamental conclusion

Overall we see the case for fundamentals to maintain their negative effect on oil prices in the coming week.

Technical analysis

WTI’s price was positioned just below the 66.80 (S1) support line for most of the days since our last report yet yesterday broke above it and turned it back to a support line. Despite the correction higher which was somewhat expected given the flirtation of the price action with the lower Bollinger Band, we tend to  maintain our bearish outlook for the commodity’s price as long as the downward trendline guiding it, since the 16th of January remains intact. Should the bears maintain control over the commodity’s price, we may see its price action breaking the 66.80 (S1) clearly and use it as a resistance line to attack the 61.65 (S2) support level. Should the bulls take over, we may see WTI’s price extending their correction higher to initially break the prementioned downward trendline in a first signal that the downward motion has been interrupted and continue to aim if not breach the 72.20 (R1) resistance line, with the next possible target for the bulls being the 75.65 (R2) resistance level.            

WTI cash daily chart

• Support: 66.80 (S1), 61.65 (S2), 57.30 (S3).

• Resistance: 72.20 (R1), 75.65 (R2), 79.35 (R3) .