If you’ve been watching the crude oil market closely in 2025, you might have noticed something unusual. After a sharp selloff, prices didn’t just crash – they slammed into what looks like a concrete floor.
Technically speaking, the daily chart of West Texas Intermediate (WTI) tells a compelling story. We saw a clear “excess” pattern earlier in April, which typically signals the end of one trend and the beginning of another. Prices plunged rapidly, then bounced just as quickly, and have now entered a phase of “balance” – meaning they’re moving sideways within a broader range 58-64 levels. This type of price behavior often suggests the market is figuring out its next move.
But that’s not the only clue.
Zoom out to the monthly chart, and the story gets even more interesting. Crude oil is currently testing its 2 standard deviation lower band, based on a long-term extreme indications model. Historically, this zone has marked major long-term bottoms. Whether it was in the aftermath of the 2008 financial crisis, the 2015 shale bust, or the 2020 pandemic, oil rarely stayed at these oversold levels for long.
So why did crude crash this time?
Fundamentally, a lot has happened in a short period:
- OPEC+ ramped up production, adding more than 400,000 barrels per day starting June, pushing supply higher at a time when demand was uncertain.
- At the same time, renewed talks between the US and Iran raised hopes that sanctions might be lifted, bringing Iranian oil back to the market.
- Meanwhile, the US imposed fresh sanctions on Chinese entities importing Iranian oil, adding a layer of geopolitical tension.
- Economic concerns also played a part. US-China trade friction and weaker economic indicators in Europe spooked demand forecasts.
- On top of all this, US producers themselves started dialing back capital expenditure, with some shale firms hinting that domestic output may have already peaked.
In other words, it was a perfect storm – oversupply fears, weak macro sentiment, and geopolitical chess all at once.
But here’s the thing: markets don’t stay oversold forever. With the daily chart showing balance and the monthly chart testing extremes, this could very well be the phase where sentiment is starting to shift. If new demand sparks from summer travel or any geopolitical risk flares up, crude could break out of this balance zone with force.
For traders and investors, this is not the time to chase the move. It’s the time to watch closely and wait for confirmation. Markets tend to bottom not when the news is good, but when it’s bad and priced in.
Right now, crude oil might just be whispering that the worst is behind.
