By Rania Gule, Senior Market Analyst at XS.com – MENA
30th May 2025:
Crude oil markets are currently going through a delicate and highly sensitive phase, where geopolitical factors, political decisions, and structural shifts in supply and demand intersect. The path toward higher prices has become narrow and complex—indeed, it can be said to be more challenging than ever before. As investors and market participants await the outcome of the OPEC+ meeting, market signals remain mixed, ranging from cautious optimism and explicit warnings of weak upward momentum. I believe the market is currently moving within a tight margin between the natural of demand and the resistance of oversupply, meaning any price increase will remain fragile and susceptible to reversal.
In the short term, the intense selling activity in crude oil adds further pressure to the market. It also clearly highlights the fragility of current sentiment. Even assuming continued strong energy demand, the psychological impact of such selling cannot be ignored, especially in an environment where markets are wary of any signs pointing to price saturation or a quick rebound in supply.
Strong demand alone, however, is not enough to shield prices from risk, especially in light of a possible return of additional supply from OPEC+, which may struggle to find buyers in a market already showing signs of fatigue. In my view, OPEC+’s decision to reintroduce additional barrels into the market represents a complex strategy aimed at testing the resilience of U.S. shale oil production, improving internal compliance among , and—most importantly—regaining a form of “market leverage” needed to combat falling prices in the event of demand slowdowns. The real issue lies in timing: global markets may simply not be ready to absorb these volumes without experiencing a degree of price correction or decline.
While U.S. shale oil production appears to have peaked—a ive factor—other developments, such as the expiration of Venezuelan export licenses and heightened geopolitical risks surrounding Iran, act as unreliable sources of market stability. Though these elements may function as temporary “shock absorbers,” I see them as volatile and prone to rapid change, making any reliance on their continued impact a risky bet. Markets now require structural stability, not temporary stemming from crises.
The strategic shift taken by OPEC+ was less of a choice and more of a necessity, dictated by the complex equation of defending market share on one hand, and trying to prices on the other. These additional barrels are likely to continue flowing during the summer months, when seasonal demand peaks. Yet the greater challenge will come afterwards, when demand weakens and markets once again face supply surpluses. At that point, the path to any sustainable price increase will be even narrower than it is today.
Short-term price is currently reinforced by rising tensions around Russia and increasing probabilities of new sanctions—factors that have notably lifted prices over the past two days. Additionally, the failure of nuclear negotiations between the U.S. and Iran—talks that could have unleashed a new wave of Iranian oil exports—has also provided psychological to the market. However, these geopolitical factors remain volatile and unpredictable, making them unreliable foundations for long-term investment strategies.
Notably, the recent U.S. court ruling overturning the “Liberation Day” tariffs imposed by the Trump istration has provided indirect to the market, though the istration quickly moved to appeal the decision. This type of legal and istrative development underscores how the market is not solely driven by supply and demand, but also swayed by decisions that may not be purely economic. This adds to the complexity of the broader picture and makes investment decisions even more challenging.
As for the OPEC+ decision regarding July production levels, expectations point to an increase of around 411,000 barrels per day, with similar gradual increases likely through the end of the third quarter. I see this as a strong signal of OPEC+’s desire to defend its market share, even at the expense of short-term prices. This is a pivotal point, as the organisation’s behaviour in the coming period will play a decisive role in shaping market direction. Should the group approve continuous production increases, oil prices could risk falling into weaker ranges, especially after the seasonal demand window closes.
Recent data from the American Petroleum Institute came in relatively positive, particularly with a notable drop in U.S. crude inventories, reflecting a temporary improvement in demand levels. On the other hand, refined products showed mixed performance, with a slight decline in gasoline stocks and a rise in distillates. This kind of divergence calls for caution and suggests that consumption recovery is not yet broad-based enough to sustainably oil prices.
Finally, speculative data indicate that investors have increased their net long positions in European gas contracts due to Norwegian supply disruptions. This move reflects a general energy market trend toward hedging against rising supply risks, but it also highlights the market’s fragility, where any disruption in the supply chain can trigger temporary pricing waves that do not necessarily reflect market fundamentals.
In conclusion, I believe the market is currently operating within a narrow band of possibilities, with OPEC+ playing a delicate balancing act between supply and demand, striving to maintain its influence in a market that has become more volatile than ever. The path toward higher prices is possible—but riddled with obstacles, and it will depend heavily on prudent supply management, sustained demand, and the absence of major geopolitical surprises.
Technical Analysis of Crude Oil ( USOIL – WTI ) Prices:
The 4-hour chart of crude oil futures (USOIL) indicates the early formation of a potential upward trend following a strong rebound from the key zone between 60.13 and 60.50. This area marks a critical technical confluence between the 23.6% Fibonacci retracement level and the 20-period simple moving average. The market’s positive reaction to this suggests a willingness to maintain it as a launching pad for a retest of the major technical resistance at 65.00. This bullish outlook is further ed by the emergence of a potential harmonic pattern (likely a “Bullish Gartley”), which may reinforce the short-term upward bias.
The technical indicators, particularly the Stochastic oscillator, are currently showing a bullish crossover emerging from oversold territory, reinforcing the outlook for continued upward momentum in the sessions. Additionally, the Relative Strength Index (RSI) is breaking above the 50 level, serving as a further confirmation of improving buying sentiment. However, the primary challenge lies in breaching the near-term resistance at 63.00 (the 50-period moving average) before targeting the upper boundary of the range at 64.17, and ultimately 65.00. These levels will be critical in determining whether the price can decisively break free from the sideways consolidation phase that began in early April.
On the other hand, if the price fails to hold the 60.13–60.50 zone, the bearish scenario will regain strength, especially given the presence of a previously broken ascending trendline that could lure sellers back into the market. A breakdown below this area would shift focus toward the next key at 58.04 — a medium-term level — and could open the door for a deeper decline toward the major bottom at 54.70, particularly if selling pressure intensifies or unexpected developments affect global supply. Thus, the price action around 60.13 will be pivotal in determining the next directional move.
Levels: 60.13 – 58.04 – 54.70
Resistance Levels: 63.00 – 64.17 – 65.00