OIL gains 2% rebounding from 4-year lows 📈

Brent Crude oil prices (OIL) are rising over 2% today, rebounding from four-year lows. The recent declines were driven by fears of market oversupply after OPEC countries, including Saudi Arabia, decided over the weekend — for the second consecutive time — to increase production. Today’s upward move likely reflects bargain hunting, as technical indicators suggested the market was technically oversold.

• However, the fundamentals for oil remain negative, as both Brent and U.S. WTI closed last week at their lowest levels since February 2021. Additional pressure on prices stems from the risk of a trade war and downgraded forecasts, which may deter institutional investors from entering long positions, especially after oil prices have fallen nearly 20% since early April.
• A potential buyer on the market today could be China, returning after a five-day public holiday. As the world's largest importer, it likely increased purchases to secure supply at lower prices. Moreover, yesterday’s ISM data came in stronger than expected, rising to 51.6 in April from 50.8 in March. The market consensus had forecast a decline to 50.2.
• On Monday, Barclays cut its Brent oil forecast by $4 to $70 for 2025, and now sees $62 as the target for 2026. Meanwhile, Goldman Sachs expects another OPEC+ production increase of 400,000 barrels per day in July.

OIL Chart (H1 & D1)

Source: xStation5