US crude oil oscillates near the pressure of the tank, waiting for the inventory data to land

In early Asian trading on Wednesday, international oil prices fell slightly, mainly due to the easing of the supply and demand balance and the global economic outlook weighed down by trade concerns. Brent crude oil futures fell 0.1% to $65.58 a barrel, while US WTI crude oil fell 0.1% to $63.32.

The pullback came after both rose about 2 per cent in the previous session to new two-week highs. Tuesday's gains benefited from two main factors: first, Canada's massive wildfires since early May, which have caused thousands of people to evacuate and disrupted some crude production;

Second, the market expects Asian countries to reject the draft nuclear agreement proposed by the United States, thus maintaining sanctions against the major oil producer and reducing crude oil supply.

"Despite market concerns about disruptions to Canadian crude oil supplies and the impasse in Iran-US nuclear deal negotiations, the upward momentum in oil prices has been clearly suppressed by OPEC + production increases," said Takashi Ueno, senior economist at NLI Research Institute.

Ueno further pointed out that while the market once held optimistic expectations for the US-Asia trade talks, the upside for oil prices has been weakened as investors choose to take profits at a high level and concerns about the long-term negative impact of the global trade situation have increased.

The Organization for Economic Co-operation and Development (OECD) cut its global growth forecast on Tuesday, according to market research, as the impasse in negotiations between the United States and its major trading partners began to take a significant toll on its economy.

On the other hand, wildfires in Canada continue to spread, not only threatening the safety of residents, but also further disrupting crude oil production.

In addition, U.S. crude oil inventory data showed signs of supply and demand polarization. According to market sources citing American Petroleum Institute (API) data, U.S. crude oil inventories fell by 3.30 million barrels in the week ended May 30, while gasoline inventories rose sharply by 4.70 million barrels and refined oil inventories rose by 760,000 barrels.

By contrast, the median analyst estimate in market surveys is just 1 million barrels of crude oil. Official inventory data from the U.S. Energy Information Administration (EIA) will be released on Wednesday, which may have further impact on the market outlook.

From a technical point of view, US WTI crude oil continues to operate above the 200-day moving average on the daily chart, indicating some medium-term support. However, the recent price has encountered significant resistance near the $65 upper edge of the box, and the upper shadow line has been longer for two consecutive days, indicating that the bullish momentum has weakened.

The Relative Strength Index (RSI) is around 53, close to the neutral zone, indicating that the current market sentiment is on the sidelines. If it cannot effectively break through $65 in the short term, there is a risk of a pullback to the $62 support area. Conversely, if this resistance is broken, the next target may look at the $66.80 line.

Editorial opinion:

The current international oil market is in a game of multiple forces. On the one hand, geopolitical factors and natural disasters have increased short-term supply risks; on the other hand, OPEC + expansion and trade concerns have suppressed the sustainability of the price rebound.

Oil prices may remain high and volatile until there is no clear policy direction and inventory data to confirm. Keep an eye on the upcoming EIA inventory data.