The bigger risk for oil is that the supply shortage could turn into an oversupply next year. According to IEA, the supply could exceed demand by 5.05 million bpd in 2027 following the return of the Middle East oil. This might put downward pressure on prices. The Fed has become more hawkish due to continued high inflation. A rate hike by the Fed later this year could slow economic growth and lower oil demand. The supply growth and weak demand are bearish setup for oil prices unless the U.S.-Iran deal breaks down again.
WTI Oil Technical Analysis – Breakout Below $80
WTI oil has broken below $80 on the short-term chart, which was the primary support level after the U.S.-Iran war. This breakout has opened the door to further downside in the short term, whereby $87 remains the key resistance level. But the 4-hour chart shows that RSI has reached extremely oversold levels in the short term, which indicates that a rebound may develop soon.
