Since the start of the week, the oil market has remained in a state of tense equilibrium. Brent crude, having lost its May upward trend, managed to recover only partially: after falling to $68, prices rebounded on positive U.S. inventory data, but quickly ran into resistance at the broken trendline.

This boundary now holds the key to oil's near-term fate: either prices consolidate above it, paving the way toward $70 and beyond, or a new downward reversal will follow, targeting $65–66 per barrel.

Fundamentals: Demand Offers Support, But Pressure Persists

The main bullish factor has been a sharp decline in U.S. inventories. According to EIA data, crude stocks dropped by 3.17 million barrels last week, gasoline by 1.74 million, and although distillates rose by 2.93 million, they remain at the lowest seasonal level since 1996.

This trend clearly points to strong summer demand, which helped trigger a rebound from the local bottom.

However, a solid fundamental reversal has not yet materialized. Calm in the Middle East has removed the usual geopolitical risk premium, and OPEC+ continues its policy of accelerated production recovery, which weighs on prices.

Complicating matters are trade talks between the U.S. and the EU, where a deal is being discussed involving a 15% tariff on European goods and a 50% tariff on steel and aluminum beyond quotas.

If no compromise is reached by August 1, EU countermeasures could escalate global trade uncertainty and increase the risk of declining oil demand.

In the short term, the market was jolted by supply-related news: temporary delays at Russian Black Sea terminals, partial contamination of Azerbaijani oil, and India's Reliance diversifying purchases due to new EU sanctions.

These factors may provide short-term support but don't change the broader picture: without a strong catalyst, oil risks remaining in a downward phase.

Brent is now in a zone of uncertainty. The broken May trendline acts as resistance, and if prices fail to consolidate above it, downward movement is likely to resume.

Bearish targets lie at $66.7 and $65.3—areas of nearby demand. For a bullish momentum to return, oil must break through $69.5 and consolidate above $70.

Gas: Market Balancing on Critical Support

The gas market shows a similar pattern, but the pressure appears even more intense. Futures collapsed below 3.10 dollars per MMBtu, hitting the lowest level since late April. The reasons remain the same as in recent weeks: record production (107.2 billion cubic feet per day in July vs. the June record of 106.4) and revised weather forecasts.

While heat will persist in the U.S. through early August, its intensity is now expected to be lower than initially forecast, reducing short-term cooling demand.

High production volumes allow for continued strong injections into storage, with inventories already 6% above the seasonal norm. LNG flows to export terminals amount to 15.8 billion cubic feet per day—rising, but still insufficient to offset the overall supply pressure.

As a result, like oil, gas has lost its most recent upward trend (which had held since August 2024) and is now testing the critical horizontal zone of $3.00–3.10.

This level has repeatedly supported the market in the past and remains a key battleground for the bulls.

Natural gas has slightly better chances of a rebound: RSI on hourly charts has entered oversold territory, increasing the likelihood of a short-term reversal. However, as long as prices remain below the trendline, a full recovery of the previous upward momentum remains premature.

A break below 3.00 would open the door to the March lows around 2.85, while a move back above 3.30 would allow the market to aim once again for 3.50 and higher.