WTI crude oil futures bearish momentum builds

WTI has spent the past week slipping into a more defensive posture, with prices marking an eight-week low in early August before a modest rebound into August 12. The sequence matters more than the day-to-day prints: six straight declines into last week confirmed a lower-highs, lower-lows structure, the textbook signature of fading momentum, while Tuesday’s uptick looks more like position squaring than a trend change. On the tape, U.S. crude settled near $64 last week and was quoted around $64.20 by mid-day Tuesday, a level that keeps the contract below recent resistance and validates the near-term bearish turn in the chart profile.

A purely technical reading would stop there. Policy-aware readers shouldn’t. The momentum shift is a surface expression of evolving supply signals and macro expectations. First, OPEC+ has re-opened the spigot modestly for September, a reversal from the long phase of restraint. That forward supply guidance has pressed risk premiums lower and reduced the market’s willingness to pay up for near-dated barrels, especially with refiners already running hot through summer. The immediate market reaction, with prices slipping on the announcement, was consistent with a regime where supply assurance outweighs disruption fear.

Second, U.S. petroleum data remain noisy. The latest Weekly Petroleum Status Report shows refineries operating near 97% of capacity with product output softening at the margin. Inventories have been drawing faster than expected in early August, yet the EIA’s broader Short-Term Energy Outlook still projects rising global stocks later in the half, a combination that explains why the curve can sag even when a weekly print looks tight. Short-term draws into a medium-term build path compress the incentive to chase rallies, and that’s precisely the backdrop where momentum indicators flip and stay cautious.

Third, macro signaling has cooled the risk bid. The market is treating the 90-day U.S.–China tariff pause and the prospect of easier financial conditions as supportive but not catalytic given lingering uncertainty around geopolitics and demand elasticity. Prices bounced on the tariff truce headlines, yet remain caged well below prior ranges, a price action tell that demand optimism is being discounted by credible supply additions and inventory arithmetic. In short: policy reduces left-tail risk, but it doesn’t restore momentum by itself.

For sovereign allocators and central-bank-adjacent funds, the practical read is straightforward. In energy-linked portfolios, the shift to bearish momentum in WTI argues for a tighter hedge discipline through Q3: less reliance on outright length, more on optionality and time spreads that pay if contango re-emerges as inventories rebuild. The EIA’s own forecast bias, with prices supported by geopolitics but capped by stock growth, supports that posture. Momentum-conscious systematic flows will also have trimmed exposure into the six-session drawdown; discretionary desks should assume less passive buying support on dips until the data challenge the build narrative.

Producers face a different calculus. With OPEC+ signaling incremental supply and U.S. runs already elevated, near-term rallies are likely to meet hedging pressure. This is less about calling a price target than about acknowledging how policy and inventory guidance shape behavior. Boardrooms that delayed adding hedges during spring tightness now have another window to extend coverage into 2026 on strength, recognizing that the slope of the curve, not just the flat price, will carry more information if the market shifts toward mild contango. The bearish momentum read in futures is not a forecast of collapse; it is a warning that the burden of proof has shifted back to demand.

Refiners, particularly in Asia, should read the chart as breathing room rather than an all-clear. Margins benefited from the recent crude softening, but the level remains sensitive to U.S. product balances and any disruption headlines. With WTI tracking the mid-$60s and Brent the high-$60s, cracks can still compress abruptly if refinery utilization stays near the top of the historical band and if gasoline demand underperforms into shoulder season. Inventory-led price softness is not the same as margin stability.

Policy risk rounds out the picture. Markets are watching diplomatic theatre around Russia and sanctions with unusual attention. Any credible path toward de-risking Russian flows would reinforce the current momentum regime by softening the disruption premium embedded in benchmarks; conversely, a breakdown that resurrects secondary-sanctions risk would overpower the technicals. The fact that prices fell on progress headlines and only partially retraced on the tariff truce tells you which factor set is dominant today: supply assurance first, growth hopes second.

What does the chart actually signal? That WTI’s near-term impulse has turned down, and it did so into policy conditions that favor inventory rebuilds and incremental OPEC+ supply. That mix usually produces range trading with a sell-the-rally bias until a genuine demand surprise appears in the data. Momentum can and will change, but it typically turns after the fundamental narrative does, not before.

The message for policy-adjacent capital is unambiguous. Treat the bounce as tactical. Respect the drift. Hedges over heroics. This trend may look modestly accommodative for consumers, but the signaling is unmistakably cautious.