Oil Rebounds on Trade Hopes, Supply Shifts, and Bullish Signals

Oil markets are navigating a mix of optimism and caution as prices rebound from recent lows. Hopes for progress in U.S.-China trade talks and positive US economic data have fueled a multi-day rally. Meanwhile, Saudi Arabia is reshaping market dynamics with a measured supply increase aimed at reclaiming share as China—the world’s top importer—scales back on buying due to seasonal refinery maintenance. Technical indicators point to a cautiously bullish outlook, but key resistance levels will test the strength of the current momentum.

Trade Hopes Ignite Oil Rally

Oil prices rose for a fourth straight day, buoyed by optimism over U.S.-China trade talks and signs of near-term market tightness. Brent crude climbed above $67 a barrel, while WTI topped $65. US Commerce Secretary Howard Lutnick called the early discussions with Chinese officials in London “fruitful,” with talks set to continue.

While oil has slumped this year due to demand concerns and OPEC+ supply increases, the latest trade progress offers hope. Analysts note prices may pause until clear outcomes emerge. Meanwhile, the price for immediate Brent oil deliveries rose further above future prices, a sign that supply may be tighter in the short term. Geopolitical risks remain in focus, with President Trump warning Iran’s nuclear demands may be excessive.

Saudi Arabia Turns Up the Taps in Slow-Burn Oil Price War

Saudi Arabia is leading a slow-burning oil price war aimed at reclaiming market share from both US shale producers and other OPEC+ members. Recent production increases by the OPEC+ alliance, including over 400,000 barrels per day last month, mark a shift from previous efforts to prop up prices. The strategy is already showing impact, with US drilling activity dropping to its lowest level in nearly four years. The move reflects Riyadh’s intent to stop bearing the burden of price support alone.

China’s Oil Imports Cool as Refineries Hit Pause

China’s daily crude oil imports dropped to 10.97 million barrels in May—the lowest in four months and down 3% from April—due to seasonal refinery maintenance and reduced buying interest despite falling prices. Compared to a year ago, oil imports were slightly lower, falling 0.8%, while natural gas imports, including pipeline and LNG, sank 10.8%.

Despite the monthly dip, total crude imports from January to May edged up 0.3% year-on-year. Refined fuel exports also took a hit in May, falling 17.6% from a year earlier, reflecting reduced refinery activity during peak maintenance season.

Saudi Oil Shipments to China Edge Lower in July

China’s crude oil imports from Saudi Arabia are set to ease in July, falling to around 47 million barrels—about 1 million barrels less than in June, according to trade sources. Despite the minor dip, imports remain elevated for the third straight month, as China continues to take in strong volumes amid rising output from OPEC+ producers.

Oil Jumps on Strong Jobs Data

Oil prices climbed last week, marking their biggest weekly gain since September, after stronger-than-expected US jobs data eased recession fears and boosted demand expectations. The upbeat economic report prompted algorithmic traders to cut short positions sharply, adding upward pressure on prices. Optimism over renewed U.S.-China trade talks further supported the rally. Despite recent gains, oil remains rangebound as OPEC+ adds supply and global demand uncertainty persists. US oil rig counts also fell to a four-year low, signaling caution among shale producers.

Technical Analysis

After bottoming at $54.67 on April 9, crude oil has staged a solid rebound, supported by easing trade tensions and renewed optimism around U.S.-China negotiations. The initial recovery was technically signaled when prices broke above both the 20- and 50-period EMAs—an early indication of renewed buying interest.

Importantly, the subsequent higher low at $55.34—failing to breach the prior bottom—highlighted weakening bearish momentum and suggested seller exhaustion. A confirmed break above the peak at $64.63 would open the door for further upside, potentially targeting the next resistance levels at $69.27 and $71.86.

Momentum indicators support the bullish case. The Momentum Oscillator remains above the 100 mark, and the Relative Strength Index (RSI) is holding above 50, both reflecting sustained buying pressure. However, a technical crossover between the 20- and 50-period EMAs has yet to materialize, suggesting the trend is still in transition.

Should bearish momentum resurface, key support lies at $62.92, with deeper downside levels at $59.30 and $55.34. For now, the bias remains cautiously bullish, with price action and momentum indicators favoring further gains—provided resistance at $64.63 is decisively breached.

Conclusion

Crude oil markets are showing signs of renewed strength, driven by improving sentiment around trade, resilient US economic data, and strategic supply shifts from key producers. While near-term fundamentals and technicals support a cautiously bullish stance, persistent macro uncertainties—including OPEC+ supply increases, geopolitical risks, and China’s fluctuating demand—suggest that the path ahead may remain volatile. Traders will be closely watching for a confirmed breakout above key resistance levels to validate the current upward momentum.