As shown on the XTI/USD chart, WTI crude is trading below $57 today, with the 2025 low sitting near $55. Several factors are currently weighing on oil prices:
→ Uncertainty surrounding the US-China trade deal — the world’s two largest oil consumers — continues to cloud the outlook for global growth and crude demand.
→ Increased output from OPEC+ members has added further pressure, with the IEA last week raising its forecast for a global oil surplus.
→ A decline in the risk premium following the peace agreement in the Middle East has also reduced support for oil prices.
So, what could happen next?
Technical Analysis of the XTI/USD Chart
Seven days ago, we noted that:
→ In the long-term context, oil price fluctuations — following the June escalation in the Middle East — have formed a downward channel (shown in red). The current price has now slipped below its lower boundary.
→ In the short term, the pace of the decline appears to be accelerating, highlighted by the purple trajectory lines.
At that time, we suggested a scenario in which WTI could drift towards its yearly low near $55, which is now materialising. However, note the following:
→ The RSI indicator is hovering near oversold territory.
→ The chart shows signs of a Falling Wedge pattern, which often precedes a bullish reversal.
Given these signals, it is reasonable to assume that, after a roughly 10% decline since the start of the month, bears may begin locking in profits on short positions. This could trigger a technical rebound in WTI prices — potentially towards the resistance area defined by:
→ The lower boundary of the red channel;
→ The psychological level of $60;
→ The median line of the purple channel.
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