{"id":122341,"date":"2025-10-30T16:35:33","date_gmt":"2025-10-30T14:35:33","guid":{"rendered":"https:\/\/ironfx-com.wp-dev.int.theitops.net\/?p=122341"},"modified":"2026-01-16T12:57:06","modified_gmt":"2026-01-16T10:57:06","slug":"oil-outlook-oil-in-the-midst-of-conflicting-fundamentals","status":"publish","type":"post","link":"https:\/\/www.ironfxcn.com\/nl\/oil-outlook-oil-in-the-midst-of-conflicting-fundamentals\/","title":{"rendered":"Oil Outlook: Oil in the midst of conflicting fundamentals"},"content":{"rendered":"

WTI bears seem to be hesitating since yesterday allowing for a temporary stabilisation of the commodity\u2019s price. In today\u2019s report we are to have a look at the improvement of the US Sino trade relationship but also the Fed\u2019s latest interest rate decision, the state of the US oil market, the sanctions on Russian oil and OPEC\u2019s oil production intentions, all being on a fundamental level. On  a technical level, we are to provide a technical analysis of WTI\u2019s daily chart.<\/p>\n\n\n\n

Improvement of US-Chinese trade relationships could support oil prices.<\/strong><\/h2>\n\n\n\n

The Trump-Xi meeting seems to be leading to an improvement of the US-Sino trade relationships. Trump came out of the meeting, stating that the meeting was \u201camazing\u201d. From the first reports it seems that the US is to lower tariffs imposed on imports from China, China is to ease the restrictions of rare earths to the US and China is to restart massive purchases of US Soybeans among others. <\/p>\n\n\n\n

Overall the meeting seems to have served as to agreeing a framework of a potential trade deal between the two superpowers and tends to act as to thaw tensions in the US-Sino trade relationships. On the negative side, there seems to be a lack of structural changes, while the actual agreement is still to be formed. <\/p>\n\n\n\n

In any case the direction currently seems to be towards an improvement that could lead to an increase of economic activity and oil thus oil demand and the improved market expectations and optimism could provide some support for oil prices.\u00a0\u00a0\u00a0<\/p>\n\n\n\n

The state of the US oil market<\/strong><\/h2>\n\n\n\n

Continuing with the state of the US oil market, Baker Hughes last Friday reported an increase of active US oil rigs in a signal of possibly increased oil demand in the US economy which could serve as a bullish signal for oil prices. On Tuesday API reported a drawdown of -4.0 million barrels, showcasing that oil demand surpassed oil production in another bullish signal for oil. <\/p>\n\n\n\n

Yesterday we got another bullish signal as EIA reported an even wider drawdown of US oil inventories than API, of -6.858 million barrels. Should we see further depletion of US oil inventories in the coming week, we may see oil prices getting some support. \u00a0\u00a0\u00a0\u00a0<\/p>\n\n\n\n

The Fed cuts rates again but limits the easing?<\/strong><\/h2>\n\n\n\n

The Fed as was widely expected cut rates by 25 basis points yesterday, yet Fed Chairman Powell set doubts on the December meeting expected rate cut. At the moment the market has eased its expectations for the bank to continue easing its monetary policy yet they are still there. <\/p>\n\n\n\n

In any case we expect the rate cut yesterday to ease financial conditions in the US economy further that could lead to increased economic activity and thus increase demand for oil, supporting the commodity\u2019s price. Yet such expectations for an increase in oil demand could be moderated should Fed policymakers start stressing their doubts for the necessity of an extensive rate cutting path.<\/p>\n\n\n\n

OPEC\u2019s intentions for oil production and US sanctions on Russian oil<\/strong><\/h2>\n\n\n\n

Reports are highlighting the possibility of OPEC actually leaning on another oil production hike, yet as the last one also rather modest. Specifically Reuters sources spoke of another 137k barrels per day (bpd) oil production increase in December, a decision which follows a similar oil production hike for November. <\/p>\n\n\n\n

News of the oil producers\u2019 organisation hiking production levels, tends to weigh on oil prices as it increases oil supply.\u00a0 \u00a0\u00a0\u00a0\u00a0<\/p>\n\n\n\n

Ther e is nothing new that the US has sanction Russian oil, what is new is that the German branch of Rosneft (sanctioned Russian oil company) has been exempted, in what seems to be a crack in US sanctions. Indian refineries seem to have halted the import of Russian oil until they get a green light to proceed from the Indian Government, while at the same time International Energy Agency (IEA) General Secretary Birol stated that the effect of the US sanctions is to be limited because of surplus capacity that can make up for the lost oil quantities. <\/p>\n\n\n\n

Under normal circumstances the US sanctions could provide support for oil prices, as they theoretically limit the supply of the commodity in the international markets.\u00a0\u00a0<\/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