The United States Oil Fund (USO) held steady above the support around $74.50 on Thursday; holding the gains recorded in the previous session. However, it remained below the short-term 20-day EMA for the second consecutive session amid uncertainties in the broader financial market.
Crude oil price has been range-bound since early July as concerns over the US tariffs cloud the demand outlook. Notably, the bearishness is more evident in the US market than in other regions. However, analysts remain positive on the US and global oil demand.
Crude oil prices consolidate with the US market being more bearish
Crude oil price has been in consolidation mode since the start of July after the Iran-Israel ceasefire erased the prior risk premium. Notably, investors are now keen on the US tariffs ahead of the 1st August deadline. The harsh tariffs have dampened the market sentiment in what some view as a possible start to demand destruction.
However, optimism that the US will soon seal a deal with the EU has eased the bearish pressure on the crude oil market. Besides, Trump announced on Wednesday that the US has reached an agreement with Japan; setting the reciprocal levies at 15%.
Interestingly, the sentiment in the broader crude oil market is divergent. US traders appear to be more risk-averse than their peers in other regions. While those in the US are more fixated on Trump’s aggressive tariffs and the Fed interest rate cuts, the rest of the world is keen on the fundamentals including a positive demand outlook. As such, WTI oil price movements show a certain level of bearishness while the sentiment on Brent is modestly bullish.
Despite the persistent uncertainties, a bullish demand outlook continues to buoy USO price. In the US, data by the Energy Information Administration (EIA) highlighted that crude oil and gasoline inventories dropped for the week that ended on July 18th. Crude stockpiles dropped by 419 million barrels; double the estimated draw of 1.6 million barrels.
However, stocks at the Cushing delivery hub unexpectedly surged by 455,000 barrels. Besides, while the figures pointed to a positive outlook, demand should be higher during the summer driving season.
According to EIA, the US is expected to produce 13.37 million bpd in 2025; a downward revision from the previous forecast of 13.42 million bpd. In 2024, the country’s output was at 13.21 million bpd.
The agency has maintained a bullish demand outlook, expecting US oil demand to rise from 20.3 million bpd in 2024 to 20.4 million bpd in 2025. With that, it forecasts that WTI oil price will average $65.22 a barrel in the current year. Notably, the figure is an upward adjustment from the agency’s previous forecast of $62.33 per barrel. It also revised its prediction for Brent oil price from $65.97 to $68.89 a barrel in 2025.
USO price technical analysis
The USO price has held steady above the support at $74.47 despite reversing the gains recorded in the second half of last week. A look at its daily price chart shows the asset trading slightly below the short-term 25-day EMA while remaining above the medium-term 50-day EMA.
With an RSI of 51, USO price will likely remain range-bound in the short term as investors seek clarity on US tariffs and the fresh sanctions against Russia. More specifically, the range between $74.47 and $76.76 will be worth watching.
Further rebounding will likely face strong resistance around $77.50. On the lower side, a further pullback will have the bulls defending the support along the 50-day EMA at $73.86.
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