22 August 2025,02:50
Daily Market Analysis
22 August 2025, 02:50
Key Takeaways:
*U.S. crude steadied near $64 as strong demand and inventory draws offered support.
*Geopolitical risks from Ukraine tensions and trade disputes added a risk premium.
*Rising OPEC+ and U.S. supply point to looming surplus, weighing on longer-term outlook.
Market Summary:
U.S. crude prices steadied after recent volatility, trading near $64 a barrel as near-term demand signals offset deep concerns over future oversupply. A larger-than-expected 6-million-barrel inventory draw and strong summer gasoline demand underscored ongoing consumption strength, while renewed geopolitical tensions in Ukraine and potential trade escalations with India helped maintain a risk premium in the market.
Yet the structural outlook remains tilted to the downside. Rising output from OPEC+ and non-OPEC producers, including the U.S. and Brazil, is expected to drive a supply surplus later this year, with weak timespreads and a narrowing Brent-Dubai spread already signaling plentiful availability. Analysts see Q4 2025 as a turning point, where rising supply could overwhelm demand growth.
In the months ahead, oil’s trajectory will hinge on the interplay between these competing forces—resilient short-term demand and geopolitical risks versus the prospect of structural oversupply. Any escalation in trade or conflict could temporarily support prices, but the broader narrative remains one of abundant supply and limited room for a sustained rally.
Technical Analysis
USOIL has extended its rebound, last trading near $63.50 after breaking out of a descending channel that capped price action since early August. The recovery has been supported by a series of higher lows, with buyers attempting to reclaim the 100-period moving average. However, price remains capped below the $64.55 resistance, where recent rejection signals caution on further upside momentum.
Momentum indicators have shifted more constructively. The Relative Strength Index (RSI) is hovering near 59, suggesting improving bullish momentum without yet reaching overbought levels. Meanwhile, the MACD has flipped positive, with both the MACD line and histogram turning into bullish territory, signaling the potential for continued upward pressure. Volume has also shown stability during the rebound, adding weight to the recovery attempt.
Overall, the technical outlook for oil is improving as the break above the descending channel suggests a shift in momentum. Traders may look for a sustained move above $64.55 to confirm a bullish continuation, while only a drop back below $62.70 would neutralize the recovery and re-expose the downside.
Resistance levels: 64.55, 66.66
Support levels: 62.70, 60.15
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