Crude Oil Rallies on Trade Optimism and Demand Prospects

 Key Takeaways:

*Crude oil prices rallied amid improving global risk sentiment and optimism over U.S. trade deals with the U.K. and China, boosting expectations for stronger energy demand.

*OPEC+ production increases remain a key supply-side risk, with output rising by 411,000 barrels per day in June, reversing nearly half of previous cuts since 2022.

Crude oil prices advanced as risk sentiment improved on the back of trade optimism and a more constructive global economic outlook. U.S. President Donald Trump continues to make progress on multiple trade fronts, most recently with the United Kingdom, where a new agreement includes the removal of select tariffs. Additionally, over the weekend, constructive negotiations between the U.S. and China in Switzerland signaled potential headway toward resolving the long-standing trade dispute. As global trade tensions ease, expectations for stronger economic growth—and by extension, energy demand—have lifted oil prices.

However, the bullish sentiment is being counterbalanced by headwinds on the supply side. OPEC+ announced over the weekend that it will increase oil output by 411,000 barrels per day in June, marking the second consecutive monthly hike. Since April, the group has raised production by a total of 960,000 barrels per day, effectively reversing 44% of the supply cuts implemented since 2022. The gradual ramp-up in supply could exert downward pressure on prices in the coming months, particularly if demand projections falter.

Overall, the short-term outlook remains moderately bullish, supported by improving demand expectations, although rising supply from OPEC+ presents a key risk to the upside trajectory.

Technical Analysis

Crude Oil, H4 

WTI crude prices are trading higher following a breakout above the key resistance at 60.00. The MACD indicates growing bullish momentum, supporting the case for a potential retest of the 62.00 resistance level. A sustained breakout above this level could open the door for further gains toward 64.50. Conversely, if bullish momentum wanes, a pullback toward the 60.00 support level is likely. A break below this zone could trigger further downside toward 57.80.

Given the improving macro backdrop and bullish technical signals, near-term momentum favors the upside, with traders eyeing the 62.00 level as the next inflection point.

Resistance Levels: 62.00, 64.50

Support Levels: 60.00, 57.80