OPEC's gloomy forecast drags Brent crude prices lower

Brent crude prices rose nicely in the first half of the week, but buyers couldn't hold above $70 per barrel. With this backdrop, bulls likely started taking profits, leading to a nearly 2% drop in Thursday's trading session. From a technical standpoint, oil's pullback risks extending to 67.50, which may act as a support level.

Oil market sentiment worsened after OPEC's long-term forecast. Their 2026 global oil demand estimate dropped from 108 to 106.3 million barrels per day, with similar cuts through 2030. While long-term outlooks stay cautiously positive, OPEC admits China's oil consumption issues. The country keeps rapidly expanding its EV sector, which doesn't need fossil fuels.

At the same time, oil exporters, especially Saudi Arabia, are using relaxed production quotas to boost revenues. Reuters reports the Middle Eastern country will supply Chinese refineries with 51 million barrels in August, its highest volume in 2 years. However, analysts see this not as strong Chinese demand, but as local companies stockpiling in case Iranian exports drop.

Goldman Sachs experts expect OPEC to announce another oil production increase at its August 3 meeting, then pause. At the current moment, global supply and demand are nearly balanced, but a surplus is likely by year-end. Additionally, non-OPEC oil production is rising, especially in Guyana, Brazil, Canada, and the US. This is putting more pressure on prices.

The Stochastic indicator on Brent crude's daily chart is nearing overbought territory, signaling high risk of a downward reversal. The nearest support level sits at 67.50.

Consider the following trading strategy:

Sell Brent at the current price. Take profit — 67.5. Stop loss — 70.5.