Oil likely to stay rangebound as supply glut fears offset demand hopes

Vijay Valecha , May 26, 2025, Khaleej Times

Global oil prices are likely to stay rangebound, as any temporary boost due to geopolitical developments are expected to be offset by increasing supply, analysts say.

Oil prices traded around flat on Monday after US President Donald Trump extended a deadline for trade talks with the European Union, easing concerns about US tariffs on the bloc that could hit fuel demand.

Brent crude futures were unchanged at $64.78 a barrel by 1234 GMT while US West Texas Intermediate crude slipped 4 cents to $61.49 a barrel, Reuters reported.

However, a bearish outlook is likely soon, as the Organisation of the Petroleum Exporting Countries and their allies — collectively known as Opec+ - is expected to further increase their production in addition to the barrels already announced.

This week, the producer group is expected to meet twice, one online on Wednesday with all Opec+ members to discuss the group’s common strategy, and one on Sunday with just the eight member states — known as the “V8” — that have made the largest cuts in recent years, AFP reported.

Crude oil has declined sharply this year amid concerns that Trump’s import tariffs could dent economic growth and curb demand, just as Opec+ accelerates output increases to protect market share. Oil opened the year near $74.93 and surged to $82.63 by mid-January, only to reverse course sharply, tumbling to $58.40 by April 9. A modest rebound followed, lifting prices to around $65 by late May — but that still leaves oil nearly 20 per cent below its early-year peak, analysts say.

However, potential new sanctions on Russian crude following fresh strikes on Ukraine threaten to unsettle markets. The focus now turns to Sunday’s Opec+ meeting, where the group is expected to raise output by 411,000 barrels per day in July, matching the increases seen in May and June, significantly above the hike of 137,000 barrels planned initially. Together, these factors may cap any significant upside in oil prices. This uncertainty is reflected in last week’s doji candlestick, which reflects market indecision.

Since breaking out on May 9, WTI has traded within a narrow range of $60.08 to $64.20. On Monday, it sits at $61.77, forming a doji-like candlestick that indicates indecision persists. “Immediate support lies at $61.48, where the 9- and 21-SMAs converge on the 4-hour chart, followed by key psychological support at $60. Resistance is expected between $62.75 and $63.36, marked by mid-May highs and the 50-SMA on the daily chart,” Vijay Valecha , Chief Investment Officer, Century Financial, said.

Source