WTI prices remain under pressure and are declining following a volatile period driven by geopolitical risks in the Middle East. Despite ongoing tensions surrounding Iran and uncertainty in negotiations between Washington and Tehran, the market is increasingly pricing in weakening global oil demand.
In recent weeks, WTI has given up part of its earlier gains, with investors taking profits after the sharp rally seen in early June.
Focus shifts from supply risks to demand
The main source of pressure is deteriorating expectations for global oil consumption. Analysts point to slowing fuel demand in several key regions, including China and Europe, while supply is gradually increasing. Additional downside pressure comes from expectations of rising production from OPEC+ and several non-alliance countries, raising the risk of a market surplus in the second half of the year.
Forecasts turn more cautious
Recent estimates from the U.S. Energy Information Administration (EIA) suggest a likely increase in global oil inventories in the coming quarters. The agency expects supply growth to outpace demand, which will put additional pressure on prices. Several analytical centers are also revising their price forecasts downward amid a slowing global economy and weakening macroeconomic outlook.
What’s next for the market
In the short term, WTI remains highly sensitive to developments in the Middle East and U.S. inventory data. However, the current correction shows that market participants are increasingly focused on fundamentals—namely, the state of the global economy and the supply-demand balance. As long as there are no clear signs of a sustained recovery in demand, downside risks remain, despite the ongoing geopolitical premium in oil prices.
Near-term outlook
The inability of bulls to break resistance near the $93.5 level indicates persistent risks of a breakdown below support at $91.5 and a move toward the psychological $90 level. However, as previously noted in WTI slips below $95 as Israel-Lebanon talks trigger long liquidation, any escalation in the Middle East could push WTI prices back above $95.
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