Supply Growth Limits WTI and Brent Rebound Outlook

Oil prices edged higher Tuesday. The move was shallow. Brent settled near $73.30, WTI near $69.20 – levels seen before the Iran conflict. The geopolitical premium that had pushed crude above $80 in April has largely evaporated, traders said, after the de-escalation following the Hormuz strikes.

The supply side is now the dominant force. The UAE pumped above 3.8 million barrels a day in June, the highest since April 2020. OPEC+ is set to add more barrels from August, following increases in June and July. Saudi Arabia cut its official selling price for Arab Light crude to Asian buyers for August, a sign that competition for market share is intensifying, traders said.

On the demand side, China's economic data has been mixed. Imports of crude have slowed. Refineries are running below capacity. The price cut from Saudi Arabia suggests the kingdom sees a need to stimulate buying, analysts said.

WTI found support at $66 and has been consolidating in a $66-$74 range. A break below $66 would open a path toward $60-$55, a zone that has held since 2021, traders said. On the upside, $80 is the first resistance, defined by a descending trend line from the 2022 highs. The RSI shows oversold conditions, traders said, pointing to a possible rebound from current levels.

Brent is testing the $72-$74 support area. A close below $70 would target $68, the next level from the 2020-2022 uptrend. The RSI has been consolidating within oversold levels, which suggests a directional move may develop soon, traders said.

Traders see the near-term risk as skewed to the downside given the supply schedule. A geopolitical flare-up could reverse the move. For now, the market is pricing a surplus. The next scheduled OPEC+ meeting is in August. No date has been set for the next U.S.-Iran talks.