Oil Prices Risking to Slip Big

Brent crude prices declined by 0.9% to $67.28 per barrel this week, failing once again to hold above the $68.00 support level, which increases the risk of further downside. The recovery window that opened earlier in the summer has closed, with Brent losing 6.5% in August. Seasonality now adds pressure, as September has historically been the weakest month for the markets. However, the pattern has been inconsistent in recent years, showing alternating declines and rebounds: a 9.5% drop in September 2020 was followed by a 10% rally in 2021, a 10% decline in 2022 was followed by a 7% gain in 2023, while in 2024 the market suffered another 7% fall. If the alternating cycle continues, Brent could see a 7–10% rebound this September, potentially lifting prices toward $73–$75 per barrel, just below the next resistance zone at $76–$78.

That said, fundamentals provide little justification for such a move. OPEC+ has already increased production by 547,000 barrels per day in September, fully reversing its 2023 voluntary cuts, and another output hike of up to 1.66 million b/d remains under discussion at the cartel’s next meeting on September 7. This shift suggests that OPEC+ is prioritising market share over high prices, echoing its 2014 strategy aimed at pressuring U.S. shale producers. While that earlier move triggered a 76% collapse in oil prices, today’s more responsive stabilisation mechanisms suggest that a bottom in the $50–$60 range would be more likely in a worst-case scenario.

For now, the $66–$68 zone remains a critical support area. A breakdown could open the way toward $56–$58, where OPEC+ intervention is more probable. On the upside, a rebound toward $76–$78 would likely trigger renewed supply increases from the group, capping further gains. Large investors remain cautious, adding only modest exposure via the United States Oil Fund (USO), with $44.76 million in inflows last week and $22.47 million this week signalling that institutional conviction is still lacking.

Technically, a bounce from current levels remains plausible, but weak U.S. macroeconomic data undermine the case for sustained strength. Manufacturing PMIs disappointed on Tuesday, while the JOLTs report showed job openings at their lowest since early 2021. Should Friday’s August employment report confirm further labour market softness, Brent could test $66 per barrel with scope for deeper losses.