WTI crude oil price report week from July 10: Growth thanks to concerns about global supply
During the week ending July 10, August WTI crude oil prices recorded a strong increase, with a final price of $71.84, an increase of $3.38, or 4.94%. The contract saw a wide trading range, from a low of $67.82 to a high of $76.08, before easing slightly late Thursday.
Market situation
This week's growth in oil prices was largely driven by one prominent theme: concerns about global oil supplies. Traders have added a big risk premium to crude prices as geopolitical tensions rise in the Middle East, raising concerns about the security of oil shipments through the Strait of Hormuz. These concerns outweighed downward price pressure from increased OPEC production and a surprise increase in US crude inventories.
| Index | Value |
|---|---|
| Opening price | $67.82 |
| Highest price | 76.08 USD |
| Lowest price | $67.82 |
| Closing price | 71.84 USD |
| Growth | $3.38 (4.94%) |
Concerns about supply in the Middle East fueled strong growth
The market started the week with pressure when OPEC agreed to increase its August production target, continuing efforts to bring withheld oil barrels back to the market. Typically, additional supply puts pressure on prices. However, traders quickly turned their attention to rising geopolitical risks, especially tensions related to Iran and concerns about the movement of commercial goods through the Strait of Hormuz. Since about a fifth of the world's seaborne crude passes through the region, even the slightest possibility of disruption could be enough to push prices up.
OPEC increases production but geopolitical risks prevail
Although OPEC continues to move forward with increasing production targets, traders have questioned whether those additional barrels will be enough to offset the risks of supply disruptions elsewhere. The market has viewed rising production as a long-term growth factor, while geopolitical events represent an immediate threat to current supply. As a result, concerns about exports from the Middle East become a stronger factor influencing prices than announcements of future output increases.
US stockpile report: Basic signals are mixed
The latest US government stockpile report gave mixed signals to the market. Crude oil inventories rose unexpectedly as domestic production remained strong and imports exceeded exports. However, the report also showed a draw in gasoline and distillate fuel stocks, suggesting demand from refineries remains healthy and fuel consumption continues to support the market during the summer driving season.
Economic uncertainty limits weekend buying
While supply concerns remain supportive of prices, broader economic issues have prevented prices from continuing to rise. Investors are still watching inflation, interest rate expectations and global economic growth for clues about future oil demand. These concerns encouraged some traders to take profits after oil prices hit a weekly high.
Technical forecast for next week
Long-term technical analysis of the August WTI crude oil futures market reveals one important factor: the 52-week moving average at $68.62. If it holds above this level, a strong rally is likely. Conversely, if it fails to hold, the December bottom at $55.40 could become a reality.
| Possibility of Price Increase | Ability to Discount |
|---|---|
| A sustained move above $71.56 will signal the presence of buyers. | A sustained movement below $71.56 will indicate the presence of sellers. |
| Could trigger a rally to $72.48 to $77.75. | If sellers come in thick and strong, prepare for another test of $68.62. |
Basic outlook
The fundamental outlook remains bullish heading into next week. The market has shown that geopolitical supply concerns currently carry more weight than OPEC production increases or a temporary increase in US crude inventories. As long as uncertainty surrounding oil shipments through the Middle East persists, traders are likely to maintain a risk premium in crude prices.
The market's direction next week will largely depend on whether geopolitical tensions ease or not. If concerns about global supply begin to fade, additional output from OPEC coupled with ample supply from the US could put pressure on prices. However, if supply risks remain high, buyers are likely to remain supportive of the market despite concerns about the global economy.
Over the coming week, traders' short-term focus will be on the minor pivot level at $71.56, while long-term traders should continue to monitor price action and order flow around the 52-week moving average at $68.62.
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