Oil Drops to $65.20 as Geopolitical Calm and OPEC+ Supply Plans Weigh on WTI
Oil prices edged lower on Monday, continuing last week’s steep drop as geopolitical concerns faded and supply-side risks took center stage.
Quick overview
- Oil prices fell on Monday, with WTI crude settling at $65.20 and Brent at $67.64 as geopolitical concerns eased.
- OPEC+ plans to increase production by 411,000 barrels per day in August, marking the fifth consecutive monthly hike.
- China's factory activity has contracted for the third month in a row, contributing to bearish sentiment in the oil market.
- WTI crude is currently consolidating within a tight range, with key resistance at $67.10 and support near $64.03.
Oil prices edged lower on Monday, continuing last week’s steep drop as geopolitical concerns faded and supply-side risks took center stage. West Texas Intermediate (WTI) crude settled at $65.20, slipping 0.49%, while Brent hovered near $67.64 ahead of August contract expiry.
Despite the recent pullback, June still looks set to close with a second straight month of gains above 5%. Earlier in the month, Brent briefly surged past $80 per barrel, driven by a 12-day flare-up in the Middle East. However, a temporary ceasefire erased much of that risk premium, shifting the market’s focus back to fundamentals—specifically, soft demand and potential supply increases.
OPEC+ Prepares Fifth Straight Output Hike
All eyes are now on supply. OPEC+ is reportedly planning to increase production by another 411,000 barrels per day in August—marking the fifth consecutive monthly hike. A formal announcement is expected during the group’s July 6 meeting.
While the output bump adds to oversupply concerns, supply data from the U.S. offers a slightly different picture. U.S. rig counts fell to 432 last week, their lowest level since October 2021, hinting at potential softness in future domestic production.
At the same time, China’s factory activity contracted for the third straight month, adding pressure to global demand expectations. With Asia’s largest oil consumer slowing down and supply set to rise, the balance seems tilted toward a bearish near-term bias.
Key Market Figures:
- WTI crude: $65.20
- Brent August: $67.64
- OPEC+ hike: +411,000 barrels/day (planned)
- China PMI: 3rd consecutive monthly contraction
- U.S. rig count: 432 (lowest since Oct 2021)
Technical Outlook: Tight Range Hints at Breakout
Technically, WTI is consolidating within a symmetrical triangle on the 4-hour chart. Resistance stands at $67.10, while trendline support is near $64.03. Price is stuck below the 50-period EMA at $67.45, with weak momentum suggesting indecision.
Levels to Watch:
- Upside targets: $67.10 → $69.01 → $70.54
- Downside risk: $64.03 → $62.85 → $61.47
The MACD remains neutral, and volume has been muted. In my experience, these types of tight consolidations often lead to explosive moves, once volume returns. A breakout of just above $67.10 has a potential to shift bias back to bullish. Whereas, a drop below $64.03 would likely signal bearish (downtrend) continuation.
Conclusion
WTI Crude Oil (USOIL) markets are at a crossroads. While geopolitical risks have cooled, rising OPEC+ supply and soft demand data, especially from China, are weighing on sentiment. Until traders see a confirmed breakout, WTI crude is likely to stay rangebound, with a neutral-to-bearish tilt dominating the near-term view.
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