As expected and forecasted, WTI is heading towards a test of $35 per barrel area, where we are expecting to give a pause before it bounces back or slides further. To determine which side the market might, one will have to keep an eye on the following factors.

• Supply from Russia and Saudi Arabia: These two oil market giants are fighting it out for the market share and no one is ready to back down from increasing production. Both are producing more than 10 million barrels of crude per day and approaching 11 million barrels.
• Supply from Iran: Tehran has already been the biggest incremental crude supplier this year.
• Supply from the U.S.: Commercial crude production has declined around a million barrel per day from its peak in 2015. Further decline would help the market to reach balance.
• Demand from Asian giants: Watch out for demand from China and India. The latter has been the biggest incremental crude buyer this year.
• Gasoline inventory: Crude supply glut has shifted from raw materials to finished products, mainly gasoline. Keeping a close watch of the U.S. gasoline inventory would be vital; the weekly inventory as of now is hovering at 239.1 million barrels, which is a multi-decade high.
• U.S. oil rigs: History shows that the number of rigs has been highly correlated to production. Hence, it affects sentiment. Oil rigs after dropping to a record low of 317 in May has increased to 374.

Looking at the above factors, one should have a fair idea of oil’s fundamental position and direction of price.