WTI Oil Stalls Near $68 as Inventory Shock, Tariff Risks Weigh on Bulls
WTI crude oil (USOIL) futures are holding just above $68 on Wednesday, pulling back slightly after Tuesday’s modest rally.
Quick overview
- WTI crude oil futures are slightly above $68, experiencing a pullback after a modest rally, while the bullish trend remains under pressure from various headwinds.
- The American Petroleum Institute reported a surprising 7.1 million barrel increase in U.S. crude inventories, contrasting sharply with expectations of a draw.
- President Trump's decision to not extend the tariff deadline raises concerns about a potential trade war, which could impact global oil demand, particularly from Asia.
- Despite short-term pressures, renewed Houthi attacks on shipping lanes and a downward revision in U.S. oil production forecasts may provide some support for prices.
WTI crude oil (USOIL) futures are holding just above $68 on Wednesday, pulling back slightly after Tuesday’s modest rally. Whereas, the broader bullish trend remains intact for now as there’s no shortage of headwinds. From surprise U.S. inventory builds to intensifying tariff threats, the oil market is caught between conflicting signals.
The American Petroleum Institute (API) stunned the market with a 7.1 million barrel increase in U.S. crude inventories last week. That’s the second straight build and sharply contrasts with forecasts for a 2.8 million barrel draw. With the official EIA report due later today, traders are bracing for confirmation, and possibly more pressure if the numbers align.
Adding fuel to the fire, President Trump has now ruled out any extension to the August 1 tariff deadline, ramping up fears of a broader trade war. Any escalation from here could dent global demand expectations, especially from Asia, where oil consumption is most sensitive to trade friction.
That said, the bulls aren’t entirely out of luck. Renewed Houthi attacks on Red Sea shipping lanes have stirred fresh concerns over supply routes. The Red Sea remains one of the world’s most vital arteries for crude oil moving from the Middle East to Europe and Asia. If disruptions persist, that could limit the downside, at least temporarily.
On top of that, the latest EIA Short-Term Outlook revised down its 2025 U.S. oil production forecast, citing weaker prices and a pullback in drilling activity. So while short-term pressures persist, long-term supply expectations are softening.
Chart Above Shows a Rising Channel, But Resistance Holds
Looking at the 2-hour chart above, WTI is trading inside a well-defined ascending channel, with price sitting just below key resistance at $68.89. That level has been a ceiling for multiple sessions, and we’ve now seen a small rejection candle forming near that top.
The 50-period SMA (currently at $67.20) is still trending upward and providing dynamic support. So far, buyers have stepped in on every pullback near the lower channel bound. But the RSI at 58.8 suggests momentum is softening—it’s bullish, but losing energy.
We’re not seeing major reversal candles yet, but the last few sessions have printed smaller real bodies and upper wicks—subtle signs of exhaustion near resistance.
Trade Setup: Watch $68.89 or Prepare for Pullback
Here’s how I’d approach this:
Scenario 1 – Bullish breakout:
- Entry: Break and close above $68.89
- Stop-loss: Below $67.20
- Target 1: $70.02
- Target 2: $71.28
Scenario 2 – Pullback within channel:
- Entry: Rejection near $68.89
- Stop-loss: Above $69.10
- Target 1: $67.20
- Target 2: $66.54
In my experience, when a market reacts to surprise API data and macro risk like trade deadlines, it pays to wait for confirmation. If bulls can’t push through $68.89 soon, we could see a healthy dip toward the SMA and lower channel support before any new leg higher.
Stay nimble ahead of the EIA release, and watch how the market digests both supply-side risk and macro fear.
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