Oil Drops as High EIA Reports and Iran Deal Prospects

Key Takeaways:

*U.S. crude inventories surged, raising oversupply concerns.

*Iran nuclear deal talks could add more oil to global markets.

*Bearish outlook persists without stronger demand or new risks.

Market Summary:

Crude oil markets came under pressure following a combination of negative fundamental data and geopolitical developments. The U.S. Energy Information Administration (EIA) reported a 3.454 million-barrel build in commercial crude inventories, far exceeding expectations for a 1.0 million-barrel draw. This unexpected increase signaled weaker demand or persistent oversupply, undermining near-term price momentum.

At the same time, geopolitical risk shifted with renewed dialogue between the U.S. and Iran. Statements from Iran’s top security official, Ali Shamkhani, indicated conditional openness to reviving the nuclear deal, a move that could lead to the lifting of sanctions. If realized, this would allow Iran to bring substantial volumes of crude oil back to the global market—potentially exacerbating current oversupply concerns.

Given the dual pressure of fundamental and geopolitical developments, crude oil may face continued downward bias unless offset by a significant improvement in global demand indicators. Key areas to watch include Chinese industrial activity, U.S. refinery utilization rates, and any escalation in Middle East tensions that could disrupt supply flows.

Technical Analysis

Crude Oil, H4

Crude oil prices are under pressure after breaking below the key support level of 61.70, confirming a bearish breakout. The MACD indicates strengthening downside momentum, while the RSI stands at 44, remaining below the midline and supporting the bearish outlook.

If current momentum persists, prices may continue to decline toward the next support at 59.65. However, if bearish pressure weakens and sentiment stabilizes, oil could attempt to retest the 61.70 resistance level, which now acts as immediate overhead resistance.

Resistance levels: 61.70, 63.70
Support levels: 59.65, 57.55