• WTI crude futures remain above $80 per barrel, posting a nearly 14% gain in July, the best monthly performance since January 2022.
• Brent crude futures hold above $84 per barrel, up almost 12% in July, driven by tightening global supply and positive demand outlook.
• Voluntary output cuts by Saudi Arabia and Russia, coupled with upgraded global oil demand forecasts, contribute to bullish sentiment.
• Easing inflation in the US and expectations of the Federal Reserve’s tightening cycle ending bolster market confidence.
• The dollar index hovers near 102 but is set to decline over 1% in July due to cooling inflation, supporting a possible end to the Fed’s rate hikes.
• The Bank of Japan’s looser interest rate policy also impacts the dollar’s performance against the Japanese yen.

Crude oil is currently imbalanced to the upside, with the market auctioning above the prior balanced profile structure. However, absorption still poses a potential retracement risk. The direction of the dollar indicates a potential decrease, which could lead to lower US oil prices due to the country’s status as a net exporter of oil.

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Traders might utilize the pullback as an opportunity to add to core long positions, either around the current developing VWAP or the lower value extreme, while sellers could target the prior VWAP close level around $80.

Market volatility also indicates a positive territory, which could be seen by investors as a bearish factor. On the other hand, the median- to long-term volatility perspective suggests a more negative outlook, which might be perceived by investors as bullish for oil prices.

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