Near-Term Oil Outlook

Oil on the Fundamental Side

West Texas Intermediate (WTI) crude oil prices rose for the second day in a row on Wednesday, rising nearly 2% to $58.40 a barrel, supported by supply risks linked to sanctions and hopes for a trade agreement between the United States and China.

Supply concerns re-escalated following news of the postponement of a summit between US President Donald Trump and Russian President Vladimir Putin, and fears of supply disruptions resulting from Western governments pressuring Asian buyers to reduce their purchases of Russian oil.

Investors are also closely monitoring the progress of US-China trade talks, with officials from both countries scheduled to meet this week in Malaysia.

Trump said on Monday he expects to reach a fair trade agreement with Chinese President Xi Jinping, whom he was expected to meet in South Korea next week.

But Trump added to the uncertainty surrounding the meeting, saying yesterday it probably won't happen.

Investors are also monitoring tensions between the United States and Venezuela, a major oil producer.

The United States is also seeking oil to deliver to its strategic reserves. Analysts say the US plans to purchase oil for delivery in December and January, seeking to boost its reserves, which are 60% full. They estimate it could purchase around 3 million barrels based on current prices.

Technical Oil

Oil prices rose near $58.45 per barrel, trading below the downtrend level on the four-hour chart.

As long as it trades below this downtrend, expectations indicate further declines toward $57.25 and then $56.20 per barrel.

If the downtrend is broken and the four-hour candle closes above it, expectations indicate a rise toward $60.20 per barrel.