Oil Stuck Between Supply Disruptions and Weak Demand

Key Takeaways:

*Oil prices volatile as supply draws clash with weak demand signals.

*U.S. crude inventories showed a sharp decline, pointing to tighter near-term supply.

*Iraq’s pipeline restart through Turkey remains stalled, keeping ~200,000 bpd offline and adding to supply uncertainty.

Market Summary:

Oil prices remained volatile as traders weighed conflicting supply and demand narratives. On the supply side, U.S. crude inventories registered a notable draw, reinforcing the perception of a tightening market. However, optimism was quickly tempered by renewed uncertainty surrounding Iraq’s efforts to restart pipeline flows through Turkey. Despite Baghdad’s agreement with Kurdish authorities, objections from local producers have delayed progress, leaving more than 200,000 barrels per day of crude offline. This uncertainty has helped underpin prices, but the lack of resolution highlights the fragility of supply commitments in politically sensitive regions.

At the same time, demand concerns are becoming increasingly difficult to ignore. U.S. factory data continues to signal softening activity, with unsold goods piling up as consumer demand slows. The risk of weaker industrial consumption, coupled with sluggish global growth, is acting as a counterweight to supply-side tightness. Investors are beginning to question whether energy demand can keep pace through the remainder of the year, especially as central banks pivot toward looser monetary policy in response to slowing growth.

This push-and-pull dynamic has left oil trading in choppy ranges, with each supply headline sparking sharp but short-lived moves. Traders are acutely aware that while inventory draws and pipeline disruptions provide upside risk, the broader macroeconomic environment threatens to limit gains. Without a clear resolution on the Iraq-Turkey pipeline or a meaningful pickup in demand indicators, oil remains caught between competing forces, preventing a decisive trend from emerging.

In the near term, the market’s focus will center on two key drivers: the trajectory of global growth data and developments surrounding Iraqi pipeline flows. A continuation of supply disruptions could tighten balances further and lend support to crude, while a sharp deterioration in macro indicators would likely outweigh supply risks and send prices lower. For now, oil markets remain rangebound, with volatility set to persist as traders juggle near-term disruptions against a backdrop of weakening demand.

Technical Analysis 

USOIL, H4: 

Crude oil is stabilizing around 63.50–64.00 after recovering from the 61.50 support zone. Price recently broke out of its descending channel but is struggling to build momentum above 64.90 resistance, keeping the market in a consolidation phase. The moving averages are flattening, reinforcing a neutral bias in the short term.

RSI is sitting near 57, showing a modest recovery from earlier oversold conditions but still lacking strong bullish conviction. MACD has crossed into positive territory, with the histogram turning higher, suggesting early signs of momentum returning to the upside.

Key levels to watch include 64.90 resistance on the topside shows a close above here could open the way to 66.65 and 68.55. On the downside, support is layered at 63.20, with a deeper floor at 61.50. For now, oil is range-bound, awaiting a clear breakout catalyst.

Resistance level: 64.90, 66.65

Support level: 63.20, 61.50