International Crude Oil Market Analysis: Supply and Demand Easing Dominates, Geopolitical Disruptions Add Volatility

Currently, the international crude oil market remains in a sideways and weak pattern, with WTI crude oil fluctuating around $59.5 per barrel. The market is caught in a tug-of-war between "supply and demand easing" and "geopolitical risk support," highlighting short-term volatility, while medium- to long-term downward pressure persists.

1. Supply and Demand Imbalance as the Main Contradiction

Global crude oil supply remains ample, with OPEC+’s pause on production increases in Q1 being only a short-term adjustment, unable to alter the long-term easing trend. By 2025, the organization has cumulatively restored 2.2 million barrels per day of voluntary production cuts, with the remaining 1.65 million barrels per day increase likely to be gradually implemented by 2026. Non-OPEC+ countries are becoming the core of incremental supply, with Brazil, Guyana, and others continuing to release capacity. The IEA forecasts that non-OPEC+ supply will increase by 1.2 million barrels per day in 2026, combined with US shale oil production maintaining a high level above 13.8 million barrels per day, leading to ongoing supply-side pressure. Additionally, expectations for Venezuela’s oil production capacity recovery are heating up, further amplifying long-term supply easing concerns.

2. Short-term Disruptions Cannot Change the Trend

Geopolitical tensions show "recurrent" characteristics. Previously, escalations in US-Iran tensions drove a short-term rebound in oil prices, but as the US shifted towards economic sanctions and temporarily refrained from military strikes, geopolitical premiums quickly dissipated. However, the risk of escalation in US-Iran conflict remains. Iran, as a core member of OPEC+, with an average monthly production of 3.26 million barrels, could trigger short-term supply concerns if disrupted. Meanwhile, security risks along the Black Sea and Caspian Sea corridors are rising, with attacks on the CPC pipeline (a key source of light, low-sulfur crude oil) pushing up physical asset safety premiums, serving as a short-term support for oil prices.

3. Volatility with a Slight Downward Bias, Key Levels Under Pressure

WTI crude oil on the daily chart shows a sideways and slightly bearish pattern. Short-term moving averages are turning downward, with the 5-day moving average approaching a bearish cross below the 10-day moving average. The 20-day moving average remains dynamically resistant above $60. Key resistance is focused at $59.85; a breakout could see prices rise toward $60.82. Support levels are distributed in tiers, with the primary support at $59.07 (previous stabilization point), and a break below that could see prices fall toward $58.29, with further support in the $57.4–56.5 range. The 4-hour volatility has narrowed, showing clear consolidation within a range, awaiting a directional move.

4. Trading Strategies and Risk Alerts

It is recommended to adopt a "range-bound, shorting on rallies" approach, avoiding blindly chasing long positions. When prices rebound to the $59.8–$60.5 range and encounter resistance, consider small short positions with a stop-loss above $60.82, targeting $59.07–$58.3. If prices break below $58.3, follow the trend with shorts toward around $57.5. Should geopolitical conflicts escalate and push prices above $60.82, the market may shift to a sideways pattern, and aggressive shorting is not advised.

Risk Warning: Be alert to sudden escalation of US-Iran tensions and unexpected OPEC+ production cuts that could lead to upward risks; also monitor for demand unexpectedly declining or supply increases materializing, which could trigger further downward pressure. Strictly control positions and stop-loss levels.