Oil Price Forecast: Stable after Russia Calls Oil Market Balanced

WTI Oil Highlights

• WTI oil prices stabilize after Russia’s statement on balanced oil market
• EIA reports significant drops in US crude, gasoline, and distillate inventories
• OPEC+ not considering more output cuts, but may adjust policy

WTI Oil Overview

U.S. benchmark WTI crude oil prices were steady to better on Thursday after a significant drop in the previous session.

That move reversed the supportive effect of a surprise production cut by OPEC earlier this month and a positive government inventories report on Wednesday.

Prices stabilized following comments from Russian Deputy Prime Minister Alexander Novak, who described the oil market as balanced earlier in the session.

At 11:39 GMT, WTI Oil is trading $74.67, down $0.27 or -0.36%. On Wednesday, the United States Oil Fund ETF (USO) settled at $65.37, down $2.25 or -3.33%.

Oil Prices Drop on US Slowdown Concerns

On Wednesday, oil prices fell by nearly 4% due to concerns over a potential U.S. economic slowdown, despite a larger-than-anticipated decline in U.S. crude inventories. While the OPEC+ group of major oil producers does not currently view the need for additional oil output cuts, Russian Deputy Prime Minister Alexander Novak stated that they could always adjust their policy.

EIA Reports Significant Drop in Inventories

The Energy Information Administration (EIA) released data showing a significant drop in U.S. crude oil inventories by 5.1 million barrels to 460.9 million barrels, much higher than Reuters’ expectation of a 1.5 million-barrel decline.

Additionally, gasoline inventories fell by 2.4 million barrels to 221.1 million barrels, indicating increased demand before the summer driving season.

Distillate stockpiles also declined by almost 600,000 barrels to 111.5 million barrels, lower than the expected 800,000-barrel drop.

The EIA data showed a positive trend, including a decline in crude, gasoline, and distillate fuel inventories, a significant increase in gasoline demand compared to the previous weeks, a slight increase in refinery utilization rates, and a decline in crude runs.

Russia Sees No Need for More Output Cuts

Russian Deputy Prime Minister Alexander Novak said that the OPEC+ group does not currently see the need for more oil output cuts, despite lower-than-expected Chinese demand.

However, he mentioned that the organization can adjust its policy if necessary. Russia has reached its targeted output this month after announcing production cuts of 500,000 bpd until the end of the year.

Novak stated that the oil market is balanced, and OPEC+ does not expect global oil shortages.

OPEC’s Secretary General, Haitham Al Ghais, warned the IEA to be cautious of undermining oil industry investments, which are vital for economic growth and depend on strong oil prices.

Technical Analysis

WTI Oil is currently trading above its daily pivot at $73.89. Howeve, it’s below the R1 level at $82.53 from a technical perspective. While the long-term technicals suggest an upward trend, the short-term outlook indicates potential weakness.

If the price sustains above the R1 level, it may signal increased buying strength. And potentially lead to a near-term upward trend. Conversely, if the price sustains below the R1 level, it may indicate increased short-term selling pressure, with the pivot at $73.89 being the next major target.

Since the trend is upward, a break into $73.89 is likely to attract new buyers. This considered a value level.

Support and Resistance Line:

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