KCM foreign exchange analysis: oversupply pressures short-term fluctuations in oil prices

Recently, Brent crude oil prices have stabilized after a decline of about 2.8%, remaining above $66 per barrel, and WTI crude oil has also stabilized around $62.

The focus of the market is on the possibility of increased sanctions on Russian energy exports by Western countries. Canadian Prime Minister Carney said he hoped the West would quickly push through secondary sanctions to increase economic pressure on Russia.

In the United States, Trump has urged Europe to stop buying Russian energy in an attempt to cut off its main source of funding, but has yet to take additional measures against the Asian country's largest buyer, imposing only a 50% tariff on Indian purchases.

Supply Outlook and Oversupply Concerns

At the same time, the pressure on the supply side has gradually increased. OPEC + is gradually resuming the production cuts it had previously cut, and the increase in production from non-member countries has also increased in tandem, adding to the market's concerns about a surplus at the end of the year.

According to market research, the International Energy Agency (IEA) has raised its forecast for a glut in the global market, arguing that the return of supply and an uncertain demand outlook could exacerbate downside risks to oil prices.KCM ForexAnalysts point out that changes on the supply side remain a key variable affecting oil prices.

In addition, Iraq could soon resume crude oil exports from the Kurdish region, which had been suspended for more than two years due to payment disputes. If exports resume, additional supplies of 230,000 barrels per day will re-enter the international market, exacerbating the supply-demand imbalance in the crude oil market.

According to market research, KCM foreign exchange analysts generally believe that the current oil market lacks new substantive policy measures, and the range volatility pattern of Brent crude oil prices between $65 and $70 is likely to continue.

Industry experts point out that the recovery of exports from the Iraqi Kurdish region will become a key factor affecting the short-term supply and demand balance. If supply increases as expected, Brent crude oil will be difficult to break through the recent narrow range of fluctuations.

The daily chart of US crude oil shows that the price has found support near $62 after consecutive declines, and the short-term trend remains in the pattern of range fluctuations. The lower $60-62 range constitutes an important support, and if it falls below, it will increase downward pressure;

The above $65-67 is the key resistance area, and it is possible to open up the rebound space if it breaks through effectively. The overall K-line pattern is weak, and the moving average system is in a state of consolidation, indicating that the market is still in a wait-and-see stage in the game between supply and demand and policy, and the short-term oil price is likely to continue to maintain a sideways oscillation pattern.

editorial opinion

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Overall, oil prices are currently in a state of tug-of-war between policy games and supply and demand realities. Geopolitical risks and sanctions expectations provide support for oil prices, but the return of actual supply and concerns about excess limit the upside. In the short term, oil prices are more likely to continue range volatility rather than unilateral breakouts. KCM foreign exchange analysis believes that investors need to pay attention to supply-side movements.