Oil Market Analysis - July 11, 2025
Key Points
- Oil prices are currently trading below the resistance level of $67.44, with a potential breakout targeting $71.20.
- The International Energy Agency (IEA) has increased its supply forecast while reducing demand expectations, but tight refinery runs are supporting prices.
- Saudi Arabia plans to ship 51 million barrels of crude to China in August, the highest in two years, indicating strong demand.
Current Market Overview
Light crude oil futures are trading near flat, holding below the long-term pivot at $67.44, which is acting as a near-term resistance level. A breakout above this level, along with this week’s high of $68.94, could lead to a move towards the short-term pivot at $71.20, representing a 50% retracement from $78.40 down to $64.00.
On the downside, the 200-day moving average at $65.29 is a critical support level, with potential buying interest expected on the first test. If this support fails, further selling could push prices down to the 50-day moving average at $63.20.
IEA and OPEC Divergence
The IEA's latest report has increased its supply growth forecast while trimming demand growth expectations for the year. Despite this, peak summer refinery runs are maintaining market tightness, which is providing a price floor amid broader demand concerns. In contrast, OPEC has revised its global oil demand projections for 2026 to 2029 downward, citing slowing demand from China, which could signal longer-term bearish trends.
Tariff Risks and Sanctions
Market sentiment remains cautious due to uncertainties surrounding tariffs linked to President Trump's policies. Both Brent and WTI contracts showed little change over the week, with Brent up 0.8% and WTI down 0.3%. Prices experienced a decline of over 2% on Thursday due to concerns about the impact of new tariffs on global growth and oil demand. However, prices slightly recovered after Trump indicated plans for a significant statement regarding Russia, which raised the risk of further sanctions and increased market volatility.
Saudi Crude Exports to China
Traders are observing robust prompt demand, particularly with Saudi Arabia expected to ship around 51 million barrels of crude to China in August, marking the highest shipment in over two years. This development reinforces a price floor in the market, counterbalancing the weaker long-term demand projections and maintaining a firm structure for front-month contracts.
Market Outlook
The crude oil market is characterized by a cautiously bullish sentiment, supported by tight summer demand and strong prompt structures. However, broader challenges from tariffs, potential Russian sanctions, and revised demand forecasts are tempering upside potential. A sustained move above $67.44 and $68.94 could attract new buyers targeting $71.20, while failure to maintain above $65.29 may lead to deeper corrective moves towards $63.20.
Traders are advised to stay alert for updates on policy changes from President Trump and the European Commission's proposals regarding a floating price cap on Russian oil, as these could significantly impact near-term crude oil price projections.