Crude Pulls Back After Second Test of Resistance—Key Levels in Focus Ahead of Fed, OPEC+

Closing Summary:

WTI Crude oil futures were trending higher into yesterday’s US open, but the buying accelerated in the late afternoon when President Trump officially announced his Russian ceasefire demands while clarifying some key details.

Trump stated that if a ceasefire was not reached in 10 days, secondary tariffs of up to 100% would be issued on countries buying Russian oil (India, China). The President’s recent decision to demand Russia finalize a ceasefire in such a short period of time has caught markets on their back foot.

The effects of Trump’s threats, and also the EU’s newer and tighter sanctions, are already having an effect on markets. It’s being reported that multiple tankers are “stranded” off the coast of India – as refiners there are refusing to take their previously purchased Russian oil. The implication of Russia’s trading partners into sanctions has been a bubbling bullish catalyst since the EU announced their new rules – if the US follows suit – price could have some legs.

While the setup continues to trend bullish, our upper resistance band has now been hit twice in two days with price failing to break above. Profit taking and a reset of positioning is attractive as we head into an OPEC+ JMMC meeting this weekend.

Today’s Outlook:

Crude is trading lower this morning after failing at major technical resistance and into the Fed meeting. Macro risks are abundant and the snap-back trade in the US Dollar poses commodity market risks. The Fed will likely stick with their “wait and see” tone and this comes with markets showing significant complacency across risk assets.

Data Releases:

Yesterday’s API release was as follows [thousand bbls]:

• Crude: +1,539
• Gasoline: -5,053
• Distillates: +3,725

Estimates for Today’s EIA report are as follows [thousand bbls]:

• Crude: -2,000 estimate | -3,169 previous
• Gasoline: -500 estimate | -1,738 previous
• Distillates: -300 estimate | +2,931 previous

EIA reports have been trending bullish but last night’s API report was bearish to neutral. If the EIA surprises with another week of strong draws, we could see some buying strength.

Technical Analysis:

September futures failed twice at our major three-star resistance level of 69.76***, making highs just at that level twice and failing twice. As we noted above – the macro backdrop is fraught with potential risk-off catalysts and the ~70 range is not a bad place to take profits.

We remain bullish our mid-term fundamental outlook but prefer to remain prudent, take profits, and manage risk. We’re at technical resistance, we have the Fed, and we have an OPEC+ JMMC meeting this weekend that will inevitably produce some bearish headlines into Sunday night / Monday morning.

If price can hold, consolidate, and stabilize above the….