Oil News: Crude Traders Eye OPEC Report as Dollar Strengthens

Can Oil Prices Rebound After Steep Losses?

Light crude oil futures saw slight gains on Tuesday, attempting to recover from Monday’s significant losses. Prices are currently trading below key resistance levels, with the Fibonacci retracement at $69.21 and the 50-day moving average at $69.84. For bullish momentum to take hold, buyers would need to push prices past these marks. However, downside risks remain, with $66.72 and $65.75 as potential targets if selling resumes. A strengthening U.S. dollar continues to keep bullish traders cautious, awaiting a market-moving catalyst.

At 10:54 GMT, Light Crude Oil Futures are trading $68.48, up $0.44 or +0.65%.

Will OPEC’s Monthly Report Move Markets?

Traders are awaiting OPEC’s monthly report, which could offer guidance on price direction. Oil markets are hesitant, balancing concerns over global oversupply and disappointment with China’s recent $1.4 trillion stimulus plan, which fell short of boosting crude demand. Deflation concerns in China and limited fiscal measures from Beijing have hurt sentiment, as analysts warn that China’s recovery may not significantly drive oil demand. Both Brent and WTI futures are down more than 5% over the past two sessions, reflecting broader uncertainty around China’s economic health.

How Is the U.S. Dollar Impacting Oil Prices?

A four-month high in the U.S. dollar adds further pressure, as a stronger dollar makes oil more expensive for non-U.S. buyers. This increase is partly driven by investor expectations for pro-energy policies from the recently re-elected Donald Trump, whose stance on domestic drilling could boost U.S. supply. Analysts expect expanded production efforts, particularly if restrictions on Arctic and Gulf of Mexico drilling are lifted. Such moves could support U.S. output growth, potentially undermining OPEC+ efforts to support prices.

Can OPEC+ Balance the Oil Market?

OPEC+ faces tough decisions with a potential oil surplus looming in 2025, as rising supply from non-OPEC countries grows. Bank of America (BofA) forecasts non-OPEC output increasing by 1.4 million barrels per day (b/d) in 2025, led by Brazil, Guyana, and Canada. Slowing demand growth could force OPEC+ to consider additional production cuts to manage the market. The group’s efforts to maintain price stability could become increasingly challenging as non-OPEC supply keeps rising.

Will Geopolitical Tensions Support Oil Prices?

Although tensions in the Middle East initially lifted prices, the lack of significant supply disruptions has limited any lasting impact. Low refining margins and weak demand have kept Brent crude near $74 per barrel, a level analysts view as fair under current conditions. With upcoming reports from OPEC, the IEA, and the U.S. EIA, any further downgrades in demand forecasts could add pressure, making the market especially sensitive to fresh data.

Market Forecast: Short-Term Bearish

Given weak demand, a strong dollar, and rising supply, the short-term outlook for crude oil remains bearish. Without a strong demand catalyst or clear supply cutbacks, prices are likely to face continued downward pressure.