Crude oil price forecast after the recent crash: will it rebound?

Crude oil price has been range-bound for a week now after plunging from the 6-month high it hit in mid-June. On the one hand, concerns over a significant increase in OPEC+ output, coupled with the persistent economic uncertainties, have been weighing on the asset. 

Even so, an output increase similar to the one approved by the alliance in May, June, and July appears already priced in. Besides, a major draw from the Cushing delivery hub has offset the reported inventory surge. What’s more, a weaker US dollar continues to support oil prices by making the asset less expensive for buyers holding foreign currencies. Investors are now keen on the ensuing economic data for further guidance on the state of the US economy and the US dollar. 

 US, OPEC+ supply increase weigh on crude oil prices

The Organization of Petroleum Exporting Countries and their allies (OPEC+) is scheduled to meet on 6th July to deliberate on the group’s output in August. The potential oversupply has crude oil prices range-bound for the third consecutive session after plunging by about 12% from the 6-month high it hit late last week.

Even so, investors appear to have already priced in a planned supply increase by the group. As such, a surge of 411,000 bpd in August, which would be similar to that approved for May, June, and July, would not catch the market off guard. 

Notably, the impact of recent OPEC+ output increases is already visible. Saudi Arabia, which is a member of the organization and the biggest oil exporter worldwide, increased June shipments by 450,000 bpd compared to the previous month. 

Further weighing on crude oil price is signs of higher US inventories. Data released by the American Petroleum Institute (API) on Tuesday indicated that stockpiles increased by 680,000 barrels for the week ending on 27th June. 

The Energy Information Administration (EIA) confirmed this trend indicating thatstockpiles rose by 3.845 barrels compared to the expected 2 million. Interestingly, these figures have been reported during the summer demand season when inventories typically drop.

However, the recorded surge in US inventories has been offset by the 1.4 million barrels draw at the Cushing oil storage hub, which is also WTI oil pricing point. Indeed, it is one of the bullish factors that has the benchmark for US oil holding extending the previous session’s gains despite the persistent uncertainties. 

EIA confirmed this decline in the data released on Wednesday, marking the highest drop at Cushing since January 2025. During that period, WTI crude oil price spiked above $80 per barrel for the first time since July 2024. Besides, it is  the lowest seasonal level in two decades.   

US dollar as the oil price trend determinant

While the geopolitical tensions in the Middle East have ebbed, investors appear to be taking a wait-and-see approach ahead of the OPEC+ meeting. As such, crude oil price may remain range-bound in the short term, with the exception of an uptrend traction triggered by a weaker US dollar. 

ADP National Employment Report, which highlights private non-farm employment changes in the country, showed a significant drop in job growth. Seeing that a robust employment market is crucial for steady economic growth, the figures may negatively impact the US dollar while making crude oil less expensive for foreign buyers. However, a weaker US economy would weigh on oil demand.

As such, investors will be keen on upcoming data to gauge the direction of the US economy. More specifically, the non-farm payrolls and unemployment data slated for release on Thursday will offer further guidance on the timing and extent of Fed’s interest rate cuts in the second half of the year. Lower interest rates tend to boost economic activity and crude oil demand by extension. 

Crude oil price technical analysis

On Wednesday, WTI oil price extended gains from the previous session as the bulls strived to end the consolidation phase.. The US oil benchmark has been trading within a relatively tight range for a week now after plunging from the 6-month high it hit in mid-June. 

At the time of press, US oil price was hovering around the range’s upper border of $67.25. With a weaker US dollar and significant draw at the Cushing delivery hub, more buyers may enter the market bolstering the prices further to the resistance zone of $69.00. With this cautiously bullish outlook, the asset will likely hold steady above the support zone of $63.75 despite the persistent economic uncertainties and concerns on increased OPEC+ supply.