Crude Oil (USOIL) Forecast: Stable at $80.71 Amid Geopolitical Risks and Inventory Rise

Oil prices remained stable during Wednesday’s trade as the market balanced concerns over escalating conflicts in Europe and the Middle East against demand worries following an unexpected increase in U.S. crude inventories.

Geopolitical Risks and Supply Disruptions

Both WTI and Brent benchmarks gained over $1 in the previous session after a Ukrainian drone strike ignited an oil terminal fire at a major Russian port.

Additionally, Israeli Foreign Minister Israel Katz warned of a potential “all-out war” with Lebanon’s Hezbollah, as the U.S. attempts to avoid a broader conflict involving Iran-backed forces. An escalating war in the region could disrupt crude supply from key producers.

Market Sentiment and Economic Data

Market strategist Yeap Jun Rong noted that geopolitical tensions are driving potential disruption risks, supporting oil prices despite economic weaknesses such as weaker-than-expected U.S. retail sales and mixed data from China.

China’s May industrial output lagged expectations, but retail sales showed the quickest growth since February.

Impact of U.S. Economic Indicators

Analysts from ANZ Research highlighted that a broader risk-on tone across global markets supported crude oil prices. Mixed U.S. economic data for May has boosted bets that the Federal Reserve will cut rates sooner than expected.

The Fed is seeking further confirmation of cooling inflation and monitoring labour market conditions, with potential interest rate cuts expected by the end of the year to spur economic activity and lift oil consumption.

Despite these factors, U.S. crude stocks rose by 2.264 million barrels in the week ending June 14, according to the American Petroleum Institute, against an expected draw of 2.2 million barrels. Gasoline inventories fell by 1.077 million barrels, while distillates increased by 538,000 barrels.

Official U.S. Stocks Data

Official U.S. stock data from the Energy Information Administration is due at 1500 GMT, which could provide further direction for oil prices.

Conclusion

Overall, the WTI crude oil price forecast remains influenced by geopolitical tensions, mixed economic data, and inventory levels, with the potential for interest rate cuts adding a layer of complexity to the market outlook.

WTI Crude Oil Price Forecast – Technical Outlook

USOIL is currently trading at $80.71, reflecting a slight decrease of 0.03%. The 4-hour chart highlights the critical pivot point at $80.81, which will be essential for determining the next price movement.

Immediate resistance is noted at $81.52, followed by $82.13 and $82.93. These resistance levels will act as significant barriers if the price attempts to climb higher. On the downside, immediate support is found at $79.99, with further support levels at $79.11 and $77.95.

These support levels will be crucial in preventing the price from falling further. The Relative Strength Index (RSI) is currently at 69, indicating that the market is nearing overbought conditions, which could signal a potential reversal.

The 50-day Exponential Moving Average (EMA) stands at $78.36, providing a strong support level that could help maintain the current price levels. Overall, the outlook for USOIL remains bearish below the $81.52 resistance level.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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