Can WTI’s $61.63 Anchor a Comeback as Brent Holds $65.41?
With U.S.-China tariffs threatening demand and OPEC+ output tweaks looming, will CL=F find buyers at $60, or is a deeper pullback on the cards? | That's TradingNEWS
WTI at $61.63 and Brent at $65.41 as Downside Pressure Mounts
West Texas Intermediate (CL=F) dipped to $61.63 per barrel while Brent (BZ=F) slid to $65.41 amid a barrage of bearish catalysts. Both benchmarks are trading roughly 2 percent below last week’s highs and have struggled to reclaim the $65 and $70 ceilings, respectively, as global demand fears intensify.
US-China Tariffs Undermine Consumption Growth
The back-and-forth tariff escalations between Washington and Beijing have injected fresh uncertainty into demand forecasts. After the U.S. slapped levies on crude and natural gas, China retaliated, prompting analysts like John Evans at PVM to warn that “this wait-and-see attitude is leaving a bad taste,” with every breakdown in talks threatening to shave off hundreds of thousands of barrels of daily Chinese imports. Tradition Energy’s Gary Cunningham calculates that each one-cent rise at the pump costs American consumers over $1 billion annually, reinforcing how tariff-driven price spikes could throttle global consumption.
OPEC+ Production Tweaks Fail to Provide Sustained Support
OPEC+ surprised markets by tripling its planned May output increase, and insiders now signal another sizeable June raise, driven in part by overproduction from Iraq and Kazakhstan. Energy Aspects’ Amrita Sen suggests a three-month “accelerated unwind” could extend into summer, flooding markets with an extra 500,000 bpd. This surge has outpaced demand growth, leaving inventories bloated despite repeated production cuts.
U.S. Shale Patch Tests Viability Below $65
U.S. shale drillers are re-evaluating expansion as WTI languishes under $65. Baker Hughes reports 481 active rigs, down from 511 a year ago, even after a marginal weekly uptick. Citigroup’s model predicts a loss of 25 rigs if prices stay at $65 and up to 75 rigs idled should WTI slip below $60, portending a potential production decline. The EIA now pegs U.S. output growth at only 300,000 bpd for 2025—100,000 bpd less than prior forecasts—underscoring how sustained sub-$65 pricing could starve future supply.
Iran Nuclear Talks and NOPEC Threat Add Geopolitical Complexity
Progress in U.S.-Iran nuclear negotiations has traders bracing for a sanction rollback that could unleash 1 million barrels per day of Iranian crude, applying further downward pressure. Meanwhile, former President Trump’s push to revive the NOPEC Act remains a latent threat: if enacted, it could strip OPEC members of sovereign immunity, freeze their U.S. assets and fundamentally alter market dynamics by outlawing production-cap agreements.
Saudi Fiscal Strains Amplify U.S. Leverage on Oil Prices
With Saudi Arabia requiring Brent at a minimum of $90.90 to balance its 2025 budget, Vision 2030 megaprojects have been slashed—Neom’s original 106-mile plan trimmed to just 1.6 miles—and public debt surged 16 percent to over $324 billion. Senior U.S. and EU sources confirm that Riyadh’s dependence on American bond markets and military support grants Washington unparalleled sway to pressure output—and by extension prices—within the $40–$80 “Trump Range.”
Technical Ranges Signal Consolidation Between $60 and $65
WTI has consistently found a floor at $60 and a ceiling near $65, while Brent’s broader $10 range between $62 and $72 has narrowed. Momentum oscillators on daily charts show neutral readings, indicating neither buyers nor sellers command clear sway until one of these thresholds gives way.
Strategic Outlook: Accumulate on Dips Toward $60
Given the confluence of demand headwinds, oversupplied markets and geopolitical uncertainty, oil prices are likely to meander within current bands before any decisive breakout. Tactical buyers should consider scaling into long positions if WTI retests $60, targeting a rebound toward $68–$70. Conversely, a break below $60 would warrant reassessment as rig shutdowns and OPEC+ cuts may be insufficient to arrest a deeper slide. Oil remains a trader’s market: patience on the sidelines ahead of clearer supply–demand signals could prove prudent.
