Oil Market Caught Between Asian Strength and Global Headwinds

Crude oil markets remain under pressure as a mix of supply shifts, geopolitical tensions, and technical weakness shapes sentiment. Strong buying from Chinese refiners and Saudi Arabia’s second consecutive price hike highlight firm demand signals in Asia, while US crude stocks continue to tighten. At the same time, prices are weighed by the longest losing streak since 2021, heightened trade frictions between Washington and New Delhi over Russian oil, and OPEC+ output increases. Technical indicators point to a sustained bearish bias, keeping traders focused on key support and resistance levels in the sessions ahead.

China Boosts Oil Imports as Refineries Restock

China imported 11.5% more crude oil in July than it did a year ago, bringing in the equivalent of 11.12 million barrels per day. The increase came as big state-owned refineries boosted production after finishing maintenance work. However, imports were down 5.4% from June, when buying hit a near two-year high due to heavy stockpiling of discounted oil, especially from sanctioned suppliers like Iran. Refinery operations in July ran at about 72% capacity, helped by better profit margins and efforts to rebuild fuel reserves. Analysts say the strong imports are more about taking advantage of cheap oil and restocking supplies than a sign that domestic fuel demand is booming.

Saudi Lifts Oil Prices Again on Strong Asian Demand

Saudi Arabia raised its September oil prices to Asia for the second month in a row, betting on strong regional demand. The flagship Arab Light grade will sell at a $3.20 per barrel premium to the Oman/Dubai benchmark, up $1.00 from August. Prices for other grades also rose by $0.70 to $1.20. The move follows steady refining margins in Asia, reduced Russian competition, and expectations that demand will stay robust, potentially boosted by lower Russian supply to India. Aramco remains bullish, forecasting global oil demand in the second half of 2025 to be more than 2 million barrels per day higher than in the first half.

Oil Slumps to Longest Losing Streak Since 2021

Oil prices are on track for their longest losing streak since 2021, with Brent nearing $66 a barrel and WTI under $64 after seven straight declines. Traders see little supply impact from US efforts to broker peace in Ukraine, even as Washington penalizes India for buying Russian crude and hints at possible tariffs on China. August’s slump follows three months of gains, with sentiment weighed by OPEC+ output increases, softer US economic growth, and fading geopolitical risk premiums. Analysts warn the market could turn more bearish as peak demand season winds down and supply concerns ease.

Tariff Clash Puts India’s Russian Oil Trade in the Crosshairs

The US decision to double tariffs on Indian goods over New Delhi’s continued purchases of Russian crude has put Prime Minister Narendra Modi in a political and economic bind. Halting imports risks straining ties with Moscow, while continuing them could harm relations with the U.S., India’s largest export market. Despite narrowing discounts, Russia still supplies around 37% of India’s crude, making it one of Moscow’s top buyers. State refiners are already seeking alternatives from the US, the Middle East, and Africa, but analysts say imports from Russia are unlikely to drop to zero, viewing the standoff as more political than economic. The shift could leave Russian producers searching for new buyers and deepen U.S.-China trade tensions.

US Crude Stocks Fall as Fuel Demand Shifts

US oil refineries processed 17.1 million barrels per day in the week ending August 1, running at nearly 97% capacity. Gasoline and diesel (distillate) production both fell, while crude oil imports dipped to 6.0 million barrels per day, about 10% lower than a year ago. Commercial crude inventories dropped by 3 million barrels to 423.7 million — 6% below the five-year average — with gasoline and distillate stocks also down. Propane supplies rose and remain above average. Overall petroleum demand averaged 20.6 million barrels per day over the past month, slightly higher than last year, but gasoline and diesel use were lower, while jet fuel demand increased.

Technical Analysis

After reaching a recent high of $76.64 on June 23, crude oil has declined over 18% (from peak to trough). The pullback was initially flagged by a bearish Harami candlestick formation, reflecting waning bullish momentum.

The subsequent drop, marked by a decisive bearish candle, saw prices close below the 20-period Exponential Moving Average (EMA) and briefly breach the 50-period EMA intraday—indicating increasing downside pressure.

The Relative Strength Index (RSI) has dipped below the neutral 50 level, signaling persistent selling, while the Momentum Oscillator fell below 100, suggesting intensifying bearish sentiment.

Notably, the bearish crossover between the 20- and 50-period EMAs has added to the downward bias.

Should buying interest re-emerge, resistance is located at $63.64, followed by $69.94, and the recent high at $76.64. Until then, the near-term bias remains bearish, with support levels to watch at $59.30, $55.34, and $54.67.

Conclusion

In conclusion, the crude oil market remains caught between firm demand signals in Asia and mounting global headwinds. Chinese restocking and Saudi price hikes highlight regional strength, but prolonged price declines, rising geopolitical frictions, and shifting trade flows are weighing on sentiment. With U.S. inventories tightening and technical indicators reinforcing a bearish bias, traders are likely to stay focused on key support levels, while any rebound will depend on a clear shift in fundamentals or risk appetite.