Crude Oil Markets Hold Bearish-to-Neutral Outlook Amid Rising Inventories

Crude oil markets maintain a bearish-to-neutral outlook for the upcoming week, driven by steady OPEC production quotas, rising US inventories, and recovering Gulf exports. OPEC has kept November quotas unchanged, while Gulf exports have rebounded to nearly 23.3 million barrels per day, pre-war levels. US crude inventories increased by 922,000 barrels last week, further contributing to the bearish sentiment. WTI and Brent prices remain below their seven-month highs, and the XLE Energy Select Sector SPDR Fund has retreated below key resistance levels.

The ongoing geopolitical tensions between the US and Iran continue to cast uncertainty, but their impact appears contained. Signs of weakening demand, combined with rising inventories and export recovery, suggest the bearish-to-neutral trend will persist. Key levels to watch include WTI's 38.2% extension at 86.60 and Brent's 61.8% retracement at 93.30, which could signal further declines or potential dip-buying opportunities.

WTI crude oil shows a bearish bias on the daily chart, with the RSI below its moving average and the neutral 50 level. A break below 86.60 could target the 50% level near 81, while a move above 94 and 97 may expose the September high near 105. Brent crude oil, meanwhile, displays a neutral bias, with the RSI above its moving average but still below the September high. A break below 93.30 could target 89 and 84, while a move above 103 and 105.30 may challenge the September high near 108.

The XLE chart indicates a bearish reversal risk, as the fund has pulled back below 18-year resistance. Diverging and overbought conditions on the monthly RSI suggest potential downside, with a breakdown below 61 confirming the bearish outlook and a recovery above 64 and 66 challenging it.