Crude Oil Outlook: FOMC and Geopolitical Uncertainty

Key Events

• The absence of a peace deal between Russia and Ukraine has stalled crude’s reaction near the 60 price zone.
• FOMC sentiment dominates market direction, as expectations of Fed rate cuts lift commodities, currencies, and indices toward key breakout levels and 2025 extremes.
• A distant geopolitical agreement keeps sanction risks elevated heading into winter demand, maintaining supply risks and holding the primary trend in place despite building inventories.

With Russia–Ukraine negotiations drifting further out of reach, sanctions on Russian oil output are resurfacing in market discussions—particularly among major consumers such as India. This elevates market tension heading into the holiday season and year-end momentum.

While sanction risks support crude’s bullish-to-neutral hold, inventories increase. U.S. crude stockpiles rose from –3.4 million to +2.8 million barrels, bringing total inventories to 426.9 million barrels for the week, reinforcing oversupply concerns despite OPEC’s expected Q1 2026 production hold, limiting bullish follow-through.

As supply fears intersect with seasonal bullish sentiment and persistent sanction risks, crude remains stalled in a bullish-to-neutral hold near the 59–60 price zone, where key structural levels are expected to define the next directional breakout.

Crude Oil Weekly Outlook: Weekly Time Frame – Log Scale

Source: Trading view

From a weekly-timeframe perspective, crude has been trending within a downward-sloping parallel channel since October 2024, nested inside a larger down trending channel from June 2025, which itself lies within an even broader downtrend dating back to December 2023.

This multi-layered structure reinforces a broader bearish bias and establishes the key levels crude must clear to transition from short-term fluctuations toward a more constructive long-term outlook.

Upside Structure (One-Month and Six-Month Channels)

• 60.00 – Key upside breakout level that crude is currently attempting to hold.
• 62.60 – Next major resistance aligned with the upper boundary of the six-month channel.
• 66.40 → 70.00 – A confirmed weekly close above 62.60 could open a path toward the two-year channel boundary at 66.40, then 70, marking early confirmation of a longer-term bullish reversal structure.

Downside Structure

• 56.00 – A sustained move below this level may extend declines toward six-month channel support at 55.00.
• 55.00 → 49.00 – A confirmed close below 55 would expose the long-term channel boundary at 49, offering another potential buy-the-dip opportunity.

Crude’s broader structure is leaning toward a potential double-bottom reversal, either from the 55 low or the deeper 49 low. However, as long as price remains within the down trending channel established since 2023, the overarching bearish bias remains intact..

In terms of UK oil,

Brent Outlook: Weekly Time Frame – Log Scale

Source: Trading view

UK oil price action is holding above the mid-zone of a well-respected parallel channel originating in December 2023. Despite remaining within a two-year bearish bias, the short-term structure reflects a neutral-to-bullish hold, consistent with broader market behavior.

Upside Key Levels

Levels above 66 align with the upper channel boundary and the September 2025 highs near 70.00, which form the defining barrier between long-term bullish and bearish bias.

Downside Key Levels

A clear trendline connects consecutive higher lows from April 2025 through December, defining short-term bullish structure.
• A break below 60.00 would invalidate this trend, targeting 57.70 for a potential double-bottom setup.
• Extended losses could drive price toward the lower channel boundary near 52.00, aligning with a possible USOIL decline toward 49 and its respective long-term support zone.

The key structural levels outlined above remain the primary dividing lines between sustained bearish continuation and a long-awaited bullish transition in crude oil. Despite a complex mix of geopolitical and macroeconomic drivers, price continues to coil near critical levels where the next decisive breakout may define the trend heading into late 2025 and into 2026.

Written by Razan Hilal, CMT

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