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Oil Markets Test New Floor As Peace Hopes Meet Supply Glut
(MENAFN- The Rio Times) Brent and WTI entered Monday trading quietly, orbiting 62 and 58 dollars a barrel after a bruising week that reset expectations for crude.
Prices are more than 20 percent below January highs, and the market is trying to decide whether this is a floor or a waystation to cheaper oil.
The immediate shock came from Washington. A forceful push by the Trump administration for a Russia–Ukraine peace deal, with a tight deadline, made traders reprice the sanctions risk almost overnight.
If a settlement eventually relaxes restrictions on Russian exports, millions of barrels a day could reach global buyers more easily.
Russian Urals is already selling at steep discounts into India, undercutting Middle Eastern grades and forcing Gulf producers to trim official prices to defend Asian market share.
Oil stuck in oversupply, rallies still fade
Behind that headline lies an uncomfortable supply picture. U.S. output sits near record levels and inventories in rich countries remain swollen, even after a recent American stock draw linked to stronger exports and refinery runs.
OPEC+ has started to unwind earlier cuts, and banks now warn of“considerable oversupply” next year. China continues to import heavily, but a growing slice goes into storage rather than real-time consumption, which limits support for prices.
Investor behaviour confirms the loss of enthusiasm. Open interest in crude futures has fallen as both bulls and bears take risk off the table.
Flagship oil ETFs have seen net outflows, suggesting that institutions prefer to watch rather than make big long-term bets on high prices.
Technicals tell a similar story. On daily charts, both Brent and WTI are stuck below downward-sloping moving averages, with momentum indicators firmly negative and only mildly oversold.
Shorter four-hour charts show modest basing around current levels, hinting at the chance of a short-covering bounce, but not a new uptrend.
For now, rallies look more like selling opportunities than the start of a fresh bull market. Only a clear demand surprise or a decisive change of course from major producers is likely to break the grip of today's supply-driven, discipline-testing oil world.
Prices are more than 20 percent below January highs, and the market is trying to decide whether this is a floor or a waystation to cheaper oil.
The immediate shock came from Washington. A forceful push by the Trump administration for a Russia–Ukraine peace deal, with a tight deadline, made traders reprice the sanctions risk almost overnight.
If a settlement eventually relaxes restrictions on Russian exports, millions of barrels a day could reach global buyers more easily.
Russian Urals is already selling at steep discounts into India, undercutting Middle Eastern grades and forcing Gulf producers to trim official prices to defend Asian market share.
Oil stuck in oversupply, rallies still fade
Behind that headline lies an uncomfortable supply picture. U.S. output sits near record levels and inventories in rich countries remain swollen, even after a recent American stock draw linked to stronger exports and refinery runs.
OPEC+ has started to unwind earlier cuts, and banks now warn of“considerable oversupply” next year. China continues to import heavily, but a growing slice goes into storage rather than real-time consumption, which limits support for prices.
Investor behaviour confirms the loss of enthusiasm. Open interest in crude futures has fallen as both bulls and bears take risk off the table.
Flagship oil ETFs have seen net outflows, suggesting that institutions prefer to watch rather than make big long-term bets on high prices.
Technicals tell a similar story. On daily charts, both Brent and WTI are stuck below downward-sloping moving averages, with momentum indicators firmly negative and only mildly oversold.
Shorter four-hour charts show modest basing around current levels, hinting at the chance of a short-covering bounce, but not a new uptrend.
For now, rallies look more like selling opportunities than the start of a fresh bull market. Only a clear demand surprise or a decisive change of course from major producers is likely to break the grip of today's supply-driven, discipline-testing oil world.
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