Key Points:
Oil prices ended the week lower, pressured by rising OPEC+ production and ongoing U.S.-China tariff tensions.
OPEC+ may accelerate its oil production hikes in June after a larger-than-expected 411,000 bpd increase in May.
Crude oil faces technical resistance at $63.02; a break below this level could target $59.67.
Weekly Losses Deepen Amid Supply Concerns and Trade Tensions
Oil prices closed higher on Friday, but the overall trend for the week was bearish, driven by fears of oversupply and uncertainty surrounding U.S.-China trade talks.
Brent crude futures settled at $66.87 per barrel, up 32 cents on the day, but down 1.6% for the week. Similarly, U.S. West Texas Intermediate (WTI) crude finished at $63.02 per barrel, gaining 23 cents, but recorded a more significant 2.6% weekly decline.
China Tariff Exemptions Fail to Boost Market Sentiment
While China announced limited exemptions to tariffs on U.S. imports, the move failed to provide substantial support for oil prices. Beijing’s swift denial of President Trump’s claims of imminent trade negotiations kept market participants cautious. Saxo Bank analyst Ole Hansen pointed out that the protracted trade war between the world’s two largest consumers of oil, coupled with speculation about further OPEC+ production increases, has limited the potential for significant price gains in the near term.
Rising Supply Weighs on Prices as OPEC+ Eyes Faster Production Hikes
Sources revealed to Reuters that some OPEC+ members are pushing for faster oil production hikes in June, following a larger-than-expected increase of 411,000 barrels per day in May. Saudi Arabia, frustrated by overproduction from Kazakhstan and Iraq, led the push for faster action. However, disagreements remain within the group, with Russia and other members advocating for a slower ramp-up to avoid a sharp drop in prices. Kazakhstan has also indicated that it may prioritize its own production goals over OPEC+ compliance, further complicating the group’s unity.
Baker Hughes Rig Count Adds to Bearish Sentiment
Fresh supply concerns continued to weigh on the market as Baker Hughes reported a two-rig increase in the U.S. oil-directed rig count, now at 483. Additionally, the potential resolution of the Ukraine conflict could lead to an increase in Russian crude exports, adding to the global oversupply risk.
Market Outlook: Bearish Sentiment Amid Rising Supply and Trade Uncertainty
The oil market’s outlook for the near term remains bearish, with traders anticipating increased supply from OPEC+ and ongoing U.S.-China trade tensions, both of which are dampening demand growth expectations. Without a clear resolution to these external pressures, oil prices could face further downward pressure in the coming sessions.
From a technical perspective, oil has been trading around the key pivot level of $63.02. A sustained move above this level could signal the presence of buyers, with the 50-day moving average at $66.20 acting as a major target. However, if prices fall below this pivot, the market could experience a sharp decline, targeting a minor 50% retracement level at $59.67.
