Inventory Drop Boosts WTI, Rate Cut Uncertainty Holds Markets
Crude Oil Weekly Outlook: WTI rebounded from critical support as crude oil inventories dropped and rate cut expectations spiral into uncertainty. Despite a risk appetite crunch, oil is holding gains above the 63.70 mark, which may be tested with Powell’s upcoming speech at the Jackson Hole Symposium.
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Key Events to Watch:
- Fed Chair Powell's speech at Jackson Hole
- Crude oil inventories fall by 6 million barrels
- USOIL challenges the 63.80 resistance
- Russian crude purchases still face additional tariffs, strengthening WTI support
Crude oil prices remained firm above the 62.00 support, despite ongoing ceasefire negotiations that have yet to conclude. Sanctions on Russian oil exports remain in place, particularly targeting nations seen as economically benefitting from the conflict, such as India and China.
While Chinese tariffs may be largely priced in, India’s continued imports of Russian crude add another layer of uncertainty to the broader tariff risk narrative. This has kept oil in focus, with the combination of sanctions and geopolitical risks supporting prices and clouding the Fed’s rate outlook.
In parallel, the 6-million-barrel drop in U.S. inventories has lifted crude toward the 63.80 resistance, just ahead of Powell’s Jackson Hole speech, which markets hope will provide clarity on the Fed’s monetary policy path. The inventory draw may point to lingering summer demand alongside signs of slowing momentum across broader markets.
Technical Analysis: Quantifying Uncertainty
Crude Oil Outlook: Daily Time Frame – Log Scale
Source: Tradingview
WTI price action continues to respect the April–August trendline, which also serves as the neckline of the April–June inverted head and shoulders formation, holding above the $62 support zone. The current rebound is testing the $63.80 resistance, while momentum indicators lean slightly bearish.
Scenarios:
- Bullish: A clean hold above $63.80 may extend gains toward $65.00, a key resistance level, before confirming a breakout back toward $67.00 and $70.00.
- Bearish: A clean break below $61.80 may trigger downside pressure toward $59.40 and $57.40, respectively.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
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