Oil Is Preparing for the Upside

Brent crude prices declined by 0.4% to $69.24 per barrel this week, continuing a period of consolidation that began in early July, hovering just below the resistance range of $71.00–$73.00. Despite several attempts, prices have been unable to break meaningfully higher or drop significantly lower.

Over the past ten days, Brent briefly climbed to $71.99, the highest level since June 23, suggesting a potential breakout, but gains were capped following an unexpectedly conciliatory statement from U.S. President Donald Trump regarding sanctions on Russia. Trump gave Moscow 50 days to move toward a ceasefire, signalling a softer stance. Russian oil exports to China and India remain unaffected, while the White House has further eased its rhetoric, implying that the September 2 sanctions deadline could be extended depending on diplomatic progress. Speculation has also emerged around a possible high-level meeting on September 3 in Beijing between Chinese leader Xi Jinping, Donald Trump, and Russian President Vladimir Putin, which reduces the likelihood of sanctions being enforced beforehand.

Oil prices have shown limited reaction to other key developments. Rising U.S. inflation, uncertainty over Federal Reserve Chair Jerome Powell’s position, and threats of 30% tariffs on the European Union and Mexico have all failed to move prices meaningfully. Brent has remained range-bound around $69.50. Investor sentiment has been tepid, with $44.99 million in outflows from the United States Oil Fund (USO) last week, following $150 million in outflows over the prior two weeks, pointing to a slightly bearish tilt in positioning.

This week’s outlook for oil has modestly improved. Trump announced a “big” trade agreement with Japan involving 15% mutual tariffs, leaving the EU as the final unresolved trade front. Media reports suggest progress in U.S.-EU negotiations, but also a possible retaliatory measures debates if a deal is not reached by August 1. However, a European resistance seems unlikely, and even if delays occur, Trump could easily shift the deadline again, which would unlikely to affect oil prices. Meanwhile, U.S. crude inventories dropped by 3.16 million barrels last week, offering marginal support.

PMI data from the U.S., Eurozone, and the U.K. will be released later on Thursday with forecasts pointing to broadly positive results, which could lend further support to oil. Still, the market is largely lacking clear short-term catalysts, and prices are unlikely to move significantly until the end of July. More decisive movements are expected in August.

Technically, Brent crude is positioned for a potential breakout in August. A successful close above the $71.00–$73.00 resistance could open the way toward $81.00–$83.00 per barrel. Failure to break higher may instead result in a pullback toward the $61.00–$63.00 support zone.