On Wednesday, oil prices declined as investors reacted to an unexpected build in U.S. gasoline inventories ahead of the upcoming U.S.-China trade talks. Brent crude dropped by 77 cents to $61.38 per barrel, while WTI crude fell by 73 cents to $58.36 per barrel.
The decline was driven by fears of oversupply after OPEC+ decided to accelerate production increases, and concerns over weakening demand due to escalating U.S.-China trade tensions. Although the upcoming meeting between the world’s two largest economies in Switzerland could be a step toward resolving the trade conflict, analysts remain skeptical about any significant breakthrough. Meanwhile, markets are awaiting the Federal Reserve’s policy update, with expectations that the interest rate will remain in the 4.25%–4.50% range until the July 29–30 meeting.
At the same time, data from the U.S. Energy Information Administration (EIA) showed a surprising rise in gasoline inventories, raising concerns about soft demand ahead of the upcoming driving holiday season in the U.S. According to a Mizuho analyst, this marked the first negative gasoline report in recent weeks.
However, U.S. crude inventories fell by 2 million barrels—more than analysts had forecast. Some American producers have warned that U.S. oil output may have already peaked. Additionally, ongoing geopolitical tensions in the Middle East between Israel and the Houthis have contributed to a rising risk premium. As a PVM analyst noted, with faster-than-expected OPEC+ supply increases and unpredictable U.S. policymaking, market volatility is expected to persist.
Technical Analysis – WTI Crude Oil
On the 4-hour timeframe, WTI crude has failed to make a new low and has shown a strong bullish reaction from the $55.00 level, turning it into a key support area.
The latest attempt to break below $55 was accompanied by a strong bullish divergence, which pushed the price up toward the $64.00 range.
Currently, confirmation of a further rally toward $64 requires a breakout above the $59.80 resistance level and a one-hour close above it. If this scenario plays out, we will look for buying opportunities on pullbacks.
The zone between $63.51 and $64.69 is considered a critical resistance region. A breakout above this area could trigger a larger bullish move targeting the $74 level.
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