Oil Forecast and News
Crude Oil prices show a moderate pullback on Friday as news of increased exports from Gulf countries offsets concerns about stalled US-Iran peace negotiations. The US benchmark West Texas Intermediate (WTI) Oil barrel is trading a few cents below $91.00 as of writing, down from Thursday's high at $92.64, and has turned negative in the weekly chart.
Technical Analysis
In the daily chart, WTI US Oil holds a constructive near-term tone, trading well above the 100-day moving average and supported by the lower Bollinger Band, while initial resistance is reinforced by the Bollinger middle band. The Relative Strength Index (14) at 51.81 sits in neutral territory, suggesting consolidation after the recent advance rather than outright exhaustion.
On the topside, resistance is seen first at the Bollinger 20-period simple moving average around $93.70, ahead of the upper Bollinger band near $100.80, which marks a potential extension area if bulls regain traction. On the downside, immediate support is aligned close to the current price at $91.80, with stronger demand expected near the lower Bollinger band at $86.65 and then at the 100-period moving average at $84.65, where a deeper pullback would likely be tested.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fundamental Analysis
| Time | Event | Impact | Actual | Consensus | Previous |
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A report by JP Morgan affirmed on Thursday that Oil flows from Middle East countries averaged 17.7 barrels per day in September, about 98% of pre-war levels, while fuel exports averaged 3 million barrels per day, or 58% of pre-war supply.
Beyond that, news that US President Donald Trump has urged France and Germany to release “immediately” diesel stocks or face a ban on US exports has contributed to easing pressure on prices.
Crude’s reversal, however, remains limited, with tensions between the US and Iran on the rise. The Wall Street Journal, citing US officials, reported on Thursday that the Pentagon is sending a third aircraft carrier with approximately 10,000 troops to the region, in a clear signal that hostilities might resume soon.
Meanwhile, the UK Maritime Trade Operations, a Royal Navy organisation monitoring global sea traffic, reported that a tanker was hit by an unknown projectile while crossing the Strait of Hormuz on Thursday, a reminder that the key sea corridor remains far from safe, which keeps Crude prices from falling further.
About Oil
Crude oil, commonly known as petroleum, is a naturally occurring fossil fuel liquid composed of hydrocarbon underground deposits and organic materials. Its prices are typically measured in US Dollars (USD).
The top oil-producing countries include Saudi Arabia, Russia, the United States, Iran, and China, while the largest consumers are the United States, China, Japan, Russia, and Germany.
Crude oil is classified into various grades according to density (heavy versus light) and sulfur content (sour versus sweet). Lighter and sweeter crude commands higher prices because refiners can produce a greater yield of high-quality refined products from it.
Density is measured by API gravity, a scale developed to compare the density of petroleum to water. An API greater than 10 means the liquid floats on water. In general, crude Oils with API values between 40 and 45 degrees have the highest commercial value.
Sulfur content determines the quality of crude Oil. Crude with high sulfur content (sour crude) is less pure and sells cheaper compared to crude with low sulfur content (sweet crude).
Major benchmarks
There are two main benchmarks for pricing crude Oil: West Texas Intermediate (WTI) from the United States (US) and Brent from the United Kingdom (UK).
WTI Crude
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as "light" and "sweet" because of its relatively low gravity and sulfur content respectively. It is considered a high-quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered "The Pipeline Crossroads of the World".
Most WTI crude Oil is refined in the Midwest and the Gulf Coast regions of the US.
Supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, are another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
WTI serves as a benchmark in Oil pricing and is the underlying commodity of NYMEX Oil futures contracts.
Brent
Brent Crude Oil is a type of Crude Oil found in the North Sea that is used as a benchmark for international Oil prices. It is considered "light" and "sweet" because of its high gravity and low sulfur content, making it easier to refine into gasoline and other high-value products. Brent Crude Oil serves as a reference price for approximately two-thirds of the world's internationally traded Oil supplies. Its popularity rests on its availability and stability: the North Sea region has well-established infrastructure for Oil production and transportation, ensuring a reliable and consistent supply.
Brent crude is a blend from 15 different oil fields in the North Sea. It has an API gravity of 38.3 degrees and a sulfur content of around 0.37%, making it heavier and less sweet than WTI crude. Brent is suitable for the refinery of gasoline and middle distillates.
Originally traded on the International Petroleum Exchange in London, Brent crude futures have been listed on the Intercontinental Exchange (ICE) since 2005.
Oil and USD/CAD Correlation
The special relationship between Oil and the Loonie
Canada is among the world's largest Oil producers and it exports crude primarily to the US. This trade relationship directly impacts the Canadian Dollar (CAD), popularly known as the Loonie. Since Canadian dollars are needed to purchase and move Oil across the border, the fluctuation in Oil prices has a direct impact on the USD/CAD pair.
When Oil prices decline, the demand for the Loonie often weakens, causing USD/CAD to rise. Conversely, higher Oil prices frequently lead to CAD strength and a drop in the pair.
Oil prices are a significant factor influencing the Loonie's price action, alongside risk sentiment and economic fundamentals. If you are trading USD/CAD, monitoring Oil charts can provide crucial insights.