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• WTI crude futures rebounded by about 2% to surpass $71 per barrel on Tuesday, recovering from a previous session’s decline of 1.2%, despite light trading volumes due to the US Independence holiday.
• Investors are evaluating the impact of supply cuts and concerns about a potential slowdown in demand, which has been reflected in recent PMI data showing weak factory activity in the US, Europe, and China.
• Saudi Arabia announced an extension of its voluntary oil production cut of one million barrels per day (bpd) for August, potentially prolonging it further and reducing daily output to around 9 million barrels, the lowest level in years.
• Russia also revealed plans to decrease oil exports by 500,000 bpd in August, accompanied by a corresponding reduction in production.
• Despite these supply-side actions, worries about a significant economic slowdown continue to weigh on demand prospects, contributing to a nearly 7% decline in oil prices during the second quarter of 2023 and a 12% decline in the first half of the year.

Crude oil trades in a balanced manner near the lower value extreme of the yearly development, showing signs of resistance selling while buyers take advantage of dips below the DVAL on the daily interval. The market experienced some selling pressure with absorption, indicated by the selling tail on the prior day’s close. Additionally, the market pulled back to test the upper-value extreme of the previous session, providing an opportunity for traders to add to core short positions.

The volatility for the session suggests a positive trend, which could have a bearish impact on the market. However, the macro perspective indicates a negative volatility in the median- to long-term, hinting at a bullish sentiment. This combination points to a more likely scenario of balanced market behavior.

In the long-term perspective, the dollar has faced selling pressure, which could be favorable for crude oil. However, the impact of the dollar on oil prices depends on the market’s perception and the role of the US as a net exporter. A lower dollar might have a bearish effect, while a higher dollar could be supportive due to increased oil trade in the dollar currency.

Analyzing the volume profile on the monthly interval reveals the presence of several low volume areas, which may serve as targets to be refilled in both directions. This could contribute to the overall balanced market behavior as traders utilize the extremes to determine rotational scenarios.

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