{"id":113579,"date":"2025-06-05T15:42:00","date_gmt":"2025-06-05T12:42:00","guid":{"rendered":"https:\/\/ironfx-com.wp-dev.int.theitops.net\/?p=113579"},"modified":"2025-06-05T15:42:01","modified_gmt":"2025-06-05T12:42:01","slug":"oil-outlook-oil-prices-yet-fundamentals-point-downwards","status":"publish","type":"post","link":"https:\/\/www.ironfxcn.com\/ko\/oil-outlook-oil-prices-yet-fundamentals-point-downwards\/","title":{"rendered":"Oil Outlook: prices yet fundamentals point downwards"},"content":{"rendered":"

Since our last report <\/a>oil prices remained relatively stable. In today\u2019s report we are to have a look at some key issues that tend to tantalise oil traders, primarily related to the demand and supply of the international wti market. We are to compliment the fundamentals with a technical analysis of WTI\u2019s daily chart.<\/p>\n\n\n\n

US oil market signals tightness<\/strong><\/h2>\n\n\n\n

Should an oil trader take a look at the status of the US wti market, he\/she will observe a relative tightness. We make a start by noting that Baker Hughes reported an increase of active oil rigs in the US by three, with the release implying that a widening of oil demand in the US, forced wti producers to reactivate rigs in order to keep up. On Wednesday, EIA reported a drawdown in US oil inventories of -4.304 million barrels, a drawdown that is wider than the one reported last week of -2.795M. <\/p>\n\n\n\n

Also API earlier reported a substantial drawdown of -3.3 million barrels, with both agencies implying with their reports that aggregated oil demand in the US was able to surpass oil production levels thus aligning with the Baker Hughes indicator, indicating a relative tightness of the US oil market. A possible continuation of such signals could provide support for wti prices in the coming week. <\/p>\n\n\n\n

Yet at this point we should also note that EIA reported an increase of distillates stocks, which may imply an easing of demand thus in the coming week we may see an easing of the US oil market\u2019s tightness.<\/p>\n\n\n\n

OPEC and Canadian wildfires could affect wti supply<\/strong><\/h2>\n\n\n\n

On the supply side of the international oil market, we note the possible increase of OPEC wti production as a factor which could weigh on oil prices. The wti producing cartel decided another big increase of oil production equal to 411k bpd. <\/p>\n\n\n\n

It\u2019s as if the name of the game has shifted from price to market share for OPEC\u2019s member\u2019s especially Saudi Arabia. Sources of Reuters mentioned that discussions within OPEC+ were for an even higher oil output hike, which tends to be implying further increases in oil production in the coming months. <\/p>\n\n\n\n

Should the market expectations for an increase of oil production by OPEC+ intensify, we may see them weighing on wti prices as oil\u2019s supply strains would ease. Furthermore we also note the wildfires tormenting Canada at the current stage as a factor that could tighten oil supply thus support wti prices. <\/p>\n\n\n\n

Yet reports tend to show that rain has put out some of the fires, thus allowing for the output to be restored and easing the danger that was threatening oil production. Thus we may see a possible easing of market worries for the possible effect of Canadian wildfires on oil production, which in turn may also weigh on oil prices.<\/p>\n\n\n\n

Easing of Manufacturing activity may lower oil demand<\/strong><\/h2>\n\n\n\n

We tend to have some worries for the easing of economic activity in China\u2019s and US manufacturing sectors and their possible adverse effect on wti demand. It\u2019s characteristic that China\u2019s manufacturing PMI figures for May were below the reading of 50, implying a contraction of economic activity in the sector for the past month. <\/p>\n\n\n\n

Across the Pacific, the US manufacturing sector also suffered a decrease of economic activity as the US ISM manufacturing PMI figure despite being allready below the reading of 50, unexpectedly dropped even lower. <\/p>\n\n\n\n

Also the US factory orders growth rate dropped below the zero, implying a reduction and darkening the outlook of the US manufacturing sector. The contraction of economic activity in the US and China could adversely affect oil demand which in turn could weigh on oil prices. <\/p>\n\n\n\n

Tomorrow we note the release of the US employment report for May yet we tend to place more attention on a deeper fundamental issue, namely the trade tensions from Trump\u2019s tariffs, and despite the relative saturation of the subject, any escalation of trading tensions could weigh on oil prices and vice versa.<\/p>\n\n\n\n

Oil Technical Analysis<\/strong><\/h2>\n\n\n\n

WTI Cash Daily Chart<\/strong><\/h3>\n\n\n\n
\"Technical<\/figure>\n\n\n\n