Commodity Radar: Fundamentals point to bearish oil price outlook, technicals suggest otherwise. What should investors do?

Crude oil prices on the MCX slipped in Tuesday’s trade taking cues from the international markets. OPEC’s oil production hike from September along with the increase in well productivity in the US have kept investor sentiments tempered.

The anticipation of the outcome of the Friday meeting between the US President Donald Trump and Russian President Vladimir Putin is building and the Street remains wary of it.

The August crude oil futures were down by Rs 30 or 0.5% per Bbl at Rs 5,518. Meanwhile on the COMEX, the US WTI contracts were trading at $62.91 a barrel, down by $0.26 or 0.41%. Brent crude prices were $0.21 or 0.32% lower at $65.91.

Commenting on the current trends, Naveen Mathur, Director-Commodities & Currencies at Anand Rathi Shares and Stock Brokers said that oil prices are holding near two-month lows after last week’s 5% drop as markets await the crucial Trump-Putin meeting. “Any deal could ease sanctions on Russian oil, potentially boosting global supply,” he said.

OPEC’s July output rose by 270,000 bpd to 27.38 million bpd, led by Saudi Arabia and the UAE. This increase is part of OPEC+’s plan to fully reverse its largest production cuts by September, adding roughly 2.5 million bpd or about 2.4% of global demand.

UBS has lowered its Brent crude price forecasts, citing stronger-than-expected supply from South America and resilience from sanctioned producers. The bank now sees Brent at $68/bbl by end-September, falling to $62/bbl by early 2026 before recovering to $65/bbl by mid-2026. WTI’s discount to Brent is also narrowed to $3/bbl.“South American output is surging, with Brazil hitting a record high in 2025 after a weak 2024. The U.S. has also granted Chevron a license to operate in Venezuela, reducing expectations of a production drop there. Meanwhile, Iran’s oil output remains at multi-year highs, and Russia continues to export robustly, Trump’s recent tariffs target only Indian buyers, not others,” Mathur said.Mathiur recommends oil market participants to closely watch supply signals from the OPEC’s monthly report, the U.S. Energy Information Administration’s Short-Term Energy Outlook, and the International Energy Agency’s monthly update this week. In his view, the broader outlook remains bearish for oil.

Technical outlook

Contrary to the fundamentals, technical indicators signal some recovery for the week, Mathur said.

Prices are taking strong support near the 100-day moving average at Rs 5580, indicating a potential buying opportunity, the Anand Rathi analyst said, adding that the indicators like MACD and RSI are showing signs of reversal, supporting the bullish view.

On the international front, WTI crude is hovering near its support zone of $64.00–65.00 and is expected to bounce back towards $68–70.

Trading strategy

Technically, if crude breaks above Rs 5,700 on the MCX, it could move towards Rs 5,900–6,000 levels. We recommend buying near 5580–5600 with a stop loss at 5380 and targets of 5850–6000.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)