US crude oil price at crucial support as seasonal factors reign

WTI crude oil price has paused on its downtrend as investors await Wednesday’s economic events, which are crucial in shaping the market dynamics in the short to medium term. While OPEC and EIA’s reports on Tuesday were rather positive, the market appears focused on the short-term drivers, which includes the Trump-Putin meeting on Friday. At the time of writing WTI futures bounced off the support level of $62.50 to trade at $62.92.

Oil market’s seasonal factors overpower long-term demand optimism

WTI oil price movements in recent sessions highlight the market’s focus on seasonal factors, with a subtle response to the reported demand growth optimism for the medium to long-term. For instance, in its monthly oil market report, OPEC maintained its 2025 demand growth forecast unchanged while increasing that of 2026 by 100,000 barrels per day. Besides, its 2026 supply growth forecast for non-OPEC members is now down by 100,000 bpd to 630,000 bpd. These figures point to a tighter oil market in the coming year.

EIA also expects US oil production to drop by 130,000 bpd in 2026 following the recent decline in US drilling activity. On the same positive note, IEA’s monthly report highlighted an upbeat global demand forecast with an expected increase by 680,000 bpd and 700,000 bpd in 2025 and 2026 respectively. 

Despite these positive reports for the long-term, the crude oil market appears to be under pressure from seasonal factors. This includes the expected decline in demand as the summer driving season comes to an end in early September. Notably, the latest US oil inventories numbers are further fueling these concerns. 

On Tuesday, the oil benchmark traded lower after the American Petroleum Institute (API) reported an unexpected surge in the country’s weekly crude oil inventories. 

According to the agency, US crude inventories rose by 1.5 million barrels in the week that ended on 2nd August. In comparison, the stockpiles had dropped by 4.2 million barrels in the previous week. Investors are now keen on the official government inventory report slated for release later on Wednesday. 

The oil market will also be seeking clarity on the Russian oil sanctions from the Trump-Putin meeting slated for Friday at Alaska. The US President has threatened to impose secondary tariffs on Russian oil buyers if Russia does not end its war with Ukraine by Friday. 

Based on the crude oil price response to these news, the market appears to process the threats as Trump’s negotiation tactic. Trump failing to follow through on the tariffs will ease the downward supply risks, thus increasing the selling pressure.  

WTI crude oil price technical analysis

US crude oil price is hovering above the support zone of 62.50 even as the technicals hint at a further decline. A look at its daily price chart shows the formation of a bearish death cross pattern as the short-term 25-day EMA crosses the medium-term 50-day EMA to the downside. However, an RSI of 37 offers room for rebounding. 

In line with these technicals, a negative EIA inventory report may have WTI crude oil price drop further to $61.50 as a kneejerk reaction. However, a corrective rebound places the crucial support-turn-resistance level of $64 at play.