WTI Oil Price Drops $3 on OPEC Supply Hike Talk and EIA Inventory Build
Oil prices, which had been rallying steadily over the past two weeks, faced a sharp reversal today as rising supply concerns and technical..
Quick overview
- Oil prices experienced a sharp reversal today after a two-week rally, driven by rising supply concerns and technical resistance.
- West Texas Intermediate (WTI) crude surged nearly $10 but retreated sharply after hitting key resistance at the 20-day Simple Moving Average.
- Reports of OPEC+ planning to increase oil production and a surprise buildup in U.S. crude inventories contributed to the bearish sentiment.
- Despite the selloff, potential easing of tariffs on Chinese imports provided some support to market sentiment, preventing a deeper decline.
Live USOIL Chart
Oil prices, which had been rallying steadily over the past two weeks, faced a sharp reversal today as rising supply concerns and technical resistance triggered a heavy selloff.
Crude Rally Falters Below Key Resistance
West Texas Intermediate (WTI) crude had surged by nearly $10 in recent sessions, climbing from under $55 to test the $65 mark. The rally was fueled by a combination of geopolitical tensions and expectations of tighter supply.
However, the bullish momentum stalled today after WTI hit the 20-day Simple Moving Average (SMA) on the weekly chart—an area that had previously acted as firm resistance. Prices began to retreat shortly afterward, falling sharply to $61.65.
Geopolitical Headlines Spur Initial Gains
Earlier in the day, prices flirted with $65 after the U.S. Treasury imposed sanctions on Seyed Asadoollah Emamjomeh, an Iranian shipping executive accused of orchestrating the global sale of illicit Iranian oil and LPG. The move reignited fears of disruptions in the Persian Gulf region and lent initial support to oil prices.
OPEC+ Production Hike Chatter Sparks Selloff
The rally was short-lived, however. Reports emerged suggesting that OPEC+ members are planning to accelerate oil production increases for a second consecutive month. The proposal, expected to be formalized in June, triggered a shift in sentiment, with traders anticipating looser supply conditions in the second half of the year.
WTI Chart Daily – The 20 SMA Rejects the Price
This led to a decisive breakdown below $62, as the market quickly adjusted to the prospects of increased crude flows.
EIA Data Adds Weight to Bearish Shift
Adding further pressure was the latest EIA weekly crude inventory report, which showed a surprise buildup of +0.224 million barrels versus expectations for a drawdown. The figure reinforced concerns that supply may be overtaking demand in the near term, compounding downward pressure on prices.
Weekly EIA Crude Oil Report:
- Crude Oil Inventories:
Rose by +0.224 million barrels, defying expectations for a draw of -0.770 million.
The unexpected build suggests supply may be outpacing demand in the short term. - Gasoline Inventories:
Dropped by a significant -4.476 million barrels, well beyond the forecast of -1.375 million.
This sharp decline may reflect increased driving demand or refining bottlenecks. - Distillate Inventories (including diesel):
Fell by -2.353 million barrels, compared to a minimal expected draw of -0.028 million.
This hints at stronger industrial or transportation fuel usage. - Cushing, OK Stockpiles (key delivery point):
Decreased by -0.086 million barrels, a far smaller draw than last week’s -0.654 million.
Indicates some stabilization in U.S. inland oil storage, but levels remain sensitive to supply chain movements.
Trade Hopes Offer a Temporary Floor
Despite the selloff, losses were partially cushioned by fresh comments suggesting that President Trump may consider easing tariffs on Chinese imports. The possibility of improved trade relations lifted overall market sentiment, helping WTI avoid an immediate breakdown below $60—though risks remain tilted to the downside.
Conclusion: Oil Faces Near-Term Bearish Risks Despite Geopolitical Undercurrents
The recent retracement in oil prices appears to have run its course as multiple bearish catalysts converge. With OPEC+ production set to increase, U.S. inventories on the rise, and technical resistance still holding firm, the outlook for crude remains cautious in the short term. While geopolitical flashpoints like Iranian sanctions could spark volatility, the broader trend may now favor consolidation or further downside unless new supply shocks emerge.
US WTI Crude Oil Live Chart
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