Oil Price Forecast: WTI (CL=F) and Brent (BZ=F) Hold $59–$63 Range as U.S. Inventories Collide

Oil Price (WTI,BRENT) Hold Near $59 and $63 as Ukraine Strikes, Peace Stalemate, and Rising Inventories Collide

Crude oil markets remain tightly balanced as West Texas Intermediate (CL=F) trades at $59.35 and Brent (BZ=F) at $63.02, both edging up less than 1% amid geopolitical tension and conflicting supply signals. The latest Ukrainian drone strike on Russia’s Druzhba pipeline—the fifth attack in recent months—sparked a brief rally before losing momentum when reports confirmed no disruption in crude flows to Hungary and Slovakia. With U.S. inventories rising by 574,000 barrels to 427.5 million, against expectations of an 821,000-barrel draw, the market remains caught between geopolitical fear and tangible oversupply.

Geopolitical Pressure and Market Reaction

The renewed attack on Russia’s oil network highlights an escalation in Kyiv’s sustained campaign targeting the backbone of Russian export infrastructure. According to intelligence sources, coordinated strikes on refining hubs have cut Russia’s refining throughput to roughly 5 million barrels per day (bpd)—a 335,000 bpd year-on-year drop. Gasoline output fell hardest, while gasoil production declined notably, tightening refined product availability across Eastern Europe.

Yet, despite the military escalation, the Druzhba pipeline continues normal operations, removing immediate supply shock risk. The absence of physical disruption explains why crude prices, though supported, have not rallied aggressively. Consultancy Kpler describes Ukraine’s campaign as “strategically coordinated,” but the market treats it as a contained risk premium rather than a structural shift in balance.

Stalled Peace Talks Keep Risk Premium Intact

Diplomatic progress remains frozen. Meetings between U.S. envoys representing President Trump’s administration and Kremlin officials concluded with no concrete agreement. Traders initially priced in peace optimism, anticipating sanctions relief and restored Russian supply, but the collapse of talks eliminated that bearish factor. This deadlock reinforces a mild geopolitical floor near $58 (WTI) and $62 (Brent).

The broader implication is stability without direction—conflict-driven volatility contained by rising stockpiles and weak demand. The Energy Information Administration (EIA) report underscores this duality: inventories are building despite refinery utilization climbing to 91%, gasoline stocks surged 4.52 million barrels, and distillate inventories gained 2.1 million barrels. The data portrays sluggish end-user consumption, especially in the U.S., where fuel demand has softened by nearly 2.3% YoY.

Fitch’s Downward Revision Reinforces Oversupply Outlook

Fitch Ratings downgraded its 2025–2027 oil price assumptions, citing persistent oversupply and production growth outpacing consumption. The agency projects WTI averages around $60 and Brent near $65, reflecting a structural ceiling unless OPEC+ makes deeper cuts. The downgrade follows months of production resilience from U.S. shale producers, who continue output near 13.3 million bpd, and OPEC+, whose aggregate compliance slipped below 90% in November.

This fundamental oversupply, coupled with high inventories, explains why oil’s rebound remains limited. Even with geopolitical flashpoints, traders treat rallies toward $62–$64 Brent and $60–$61 WTI as short-covering rather than new bull trends.

Technical Structure: Downtrend Dominates Despite Near-Term Support

Technically, WTI (CL=F) continues to trade below its 50-day EMA near $60, which forms the ceiling of the current descending channel. The market is compressing within a narrow range—support at $58.20, resistance at $60.80—consistent with bearish continuation patterns. A confirmed break below $58 exposes the $56.40 level, where strong bid clusters previously emerged.

Brent (BZ=F) shows similar behavior: oscillating between $61.70 and $63.60, with limited upward momentum. The RSI at 47 signals neutral bias, while the MACD remains negative, reflecting weak follow-through on short rallies. Until Brent clears $65, upside remains capped. Momentum traders continue favoring short-the-rally strategies as long as supply remains unrestrained.

Demand Concerns Deepen: Inventories and Global Refining Trends

Globally, refining margins have narrowed to $6.80 per barrel, down 22% from October, as refined product demand softens in Europe and Asia. China’s crude imports slowed 4.6% MoM, with refinery utilization at a four-month low, while India’s imports climbed modestly due to winter heating demand. This offsetting dynamic keeps global consumption steady but uninspiring, hovering near 101.2 million bpd.

Meanwhile, Russia’s domestic storage nears capacity as sanctions redirect exports through opaque “shadow fleet” tankers, now responsible for 1.8 million bpd of seaborne crude. The risks of maritime incidents and logistical bottlenecks remain high, but traders increasingly discount these as long-term rather than immediate shocks.

Monetary Policy and Dollar Dynamics Add Another Layer

Markets are also pricing in a 90% probability of a 25-basis-point Federal Reserve rate cut next week, based on ADP’s report showing a 32,000-job contraction in private U.S. payrolls. Lower interest rates generally weaken the dollar, which can lift commodity prices by making dollar-denominated oil cheaper globally. However, the weaker demand backdrop mutes the bullish impact. The Dollar Index (DXY) fell to 103.4, down 1.1% this week, providing marginal support to crude benchmarks.

WTI and Brent Forecast: Compression Before Directional Break

Both WTI and Brent remain in a consolidation pattern, compressing between EMA resistances and supply overhangs. In technical terms, this resembles an accumulation wedge before a directional breakout. Yet fundamentals suggest the bias leans bearish unless demand data surprises. The immediate upside target for WTI sits at $62, while Brent could test $65 before stalling. Downside risks prevail toward $56–$57 WTI and $60–$61 Brent if peace talks remain inconclusive and U.S. inventories continue rising.

Murban’s Emerging Role in Global Oil Benchmarking

Away from traditional benchmarks, Murban crude, produced by ADNOC in Abu Dhabi, is reshaping the pricing ecosystem. With output around 1.7 million bpd, Murban’s futures trading volume hit 1.5 billion barrels in Q2 2025, with daily turnover of 31 million barrels on the ICE Futures Abu Dhabi (IFAD) exchange. S&P Global’s planned 2026 methodology update will allow Murban to trade freely against Dubai and Oman grades without floor restrictions, increasing transparency and liquidity.

This reform positions Murban as a credible competitor to WTI and Brent, narrowing its spread to WTI to under $1.50 per barrel, from $4.30 earlier in the year. The shift could reshape Asian refining benchmarks and gradually erode Western pricing dominance over Middle Eastern supply flows.

Macro Sentiment and Institutional Positioning

Hedge fund net length in crude futures fell 11% last week, the largest decline since August, signaling profit-taking and reduced exposure ahead of the Fed decision. Meanwhile, volatility in the CBOE Crude Oil Volatility Index (OVX) remains low at 27.4, consistent with a market waiting for a macro catalyst. Refining equities like ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) remain rangebound, reflecting investor skepticism toward near-term oil price upside.

Verdict — Oil Market View: HOLD / NEUTRAL with Downside Bias

WTI (CL=F) and Brent (BZ=F) hover near equilibrium levels at $59.35 and $63.02 respectively, under pressure from swelling inventories, Fitch’s downward price revision, and stalled peace negotiations. Ukraine’s strikes sustain mild risk premiums, but tangible supply flows remain intact. With U.S. output stable at 13.3M bpd, refinery runs high, and global consumption subdued, oil’s outlook remains neutral to slightly bearish. Traders should expect sideways-to-lower movement until inventories peak or OPEC+ initiates deeper coordinated cuts.

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