WTI Oil Flat After Mondays 2.2% Surge, More Upside Ahead?

[Redator]

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Oil prices surged yesterday after gapping down over the weekend. The gap down came about as the OPEC+ group, which includes OPEC and its allies, agreed to increase oil production by 548,000 barrels per day in August.

This is a bigger rise compared to the 411,000 barrels per day added in each of the last three months.

The surprise for many is the rise in Oil since Sunday night's market opened, and from my point of view there are two reasons for this which we will break down now.

Markets Misinterpret OPEC + Production Increase

Looking at the data and the overall Oil market at the moment, the move by OPEC + seems to be one targeted at gaining market share rather than price stability. This should be the actual talking point, as this is the real pivot being done by OPEC +.

Since the Covid-19 decline in oil prices OPEC + have constantly said that they are prioritizing price stability, however recent decisions suggest otherwise.

Despite conflicts and economic pressures, oil demand remains strong, especially in Asia and Africa. Western markets also continue to rely on oil despite the rise of EVs. Oil producers and OPEC members such as Iran are not even involved in the ongoing discussion regarding the unwinding of OPEC production quotas.

Production agreements show higher volumes, but actual output is still below those targets. Many OPEC members can’t meet their quotas, so fears of an oversupply are exaggerated.

The biggest impact will be on international oil companies, not consumers or producers. While profit margins might shrink, as Shell has warned, the situation isn’t critical. Shell’s concerns about a weak second half of 2025 shouldn’t cause alarm.

Positive signs for oil prices remain strong, including increased Houthi activity in the Red Sea, tensions with Iran, Russia’s economic struggles, and rising demand for private power generation.

Trade Deal Optimism to Keep Oil Prices Supported

Markets remain optimistic that trade deals will materialize and not have a huge impact on global growth. Whether misguided or not that is what recent price action is suggesting.

Looking at other risk assets, we are seeing a similar trend as news came through on trade deal announcements yesterday. The deadline of August 1 means the next three weeks could continue to display similar sways in price as markets digest trade deals and their potential implications.

Oil Inventories Data Ahead

The API (American Petroleum Institute) stock change data will be out later today. The data represents the weekly change in U.S. crude oil inventories with markets expecting a print of -2.8M.

EIA data will be out tomorrow as well and will provide us with more information on the total amount of crude oil stored in U.S. facilities.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis - WTI

From a technical standpoint, WTI continues to exhibit bullish potential.

A trendline break which occurred around June 9 was followed by a bullish rally close to 77.70 before a pullback and retest of the trendline.

Since then Oil has consolidated and has been on a grind higher and is currently caught between the 100 and 200-day MAs.

A break above the 200-day MA could lead to further upside toward resistance around the 71.38 handle.

A break below the 64.73 handle would invalidate the current bullish narrative for me and could lead to a retest of the psychological 60.00 handle.

There is also a ascending trendline currently in play which could be a good guide as to the trend moving forward. A break of the trendline would be the first sign of caution that further downside may be incoming.

WTI Oil Daily Chart, July 8, 2025

Source: TradingView.com (click to enlarge)

Support

• 66.15
• 64.73
• 62.00

Resistance

• 68.50
• 70.00
• 71.38

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