• Oil Weekly Update: Fears for global trade war weigh down sank 4.5% since the start of today’s session and negative sentiment aggravated, after Trump’s tariffs announcements on “Liberation Day” yesterday, bolstered worries that the global trade relationships will deteriorate as a result of the US hardline trading approach.
  • Even though, President Trump did not explicitly impose tariffs on energy products such as crude oil, petroleum and natural gas, the international community extrapolated that the baseline 10% tariff policy on all goods imported in the US, would stifle the prospects of strong economic growth for the US which could potentially impede the consumption of energy by denting demand.
  • Negative shocks, however, are expected to be felt by its trading partners as well, such as the European Union, Canada, Mexico, Japan, South Korea but more importantly China, who is the world’s largest consumer of crude. The question now is not, whether other nations will respond to these tariffs, but when and at what rates their reciprocal tariffs will be.
  • At the same time, OPEC+ monthly report moments ago noted that the cartel will accelerate its oil production hikes in May, with 8 of its members implementing a production adjustment of 411k barrels per day, which are equivalent to three monthly increments. The narrative attached to this move was to continue having market fundamentals and a positive market outlook.
  • Other factors weighing down oil prices were the large weekly buildups reported by both the API and EIA institutes, of approximately 6 million barrels of crude each, reversing last week’s drawdown progress. Possible reasons why may be purchases in anticipation from Canada in order to avoid the impact of tariffs.

Technical Analysis of Oil

WTI Chart – Crude sinks by over 4.5% the day after Trump’s tariff package announcement

EUR/USD chart displaying a bullish trend with upward movement indicated by green lines and arrows.
  • Resistance:  70.00 (R1), 72.50 (R2), 75.00 (R3)
  • Support: 67.00 (S1), 65.25 (S2), 63.60 (S3)

Negative momentum surrounding crude oil futures ignited after Trump’s bombastically aggressive tariff plans sparked fears for a global economic slowdown and a severe dent in oil’s demand, pushing traders to short WTI and quickly drag the commodity down into two-week lows.

Given this strong bearish catalyst, we are forced to switch our bias from bullish to bearish, treating the reaction as the end of the short lived rebound and favoring the extension of the longer-term trend towards the downside. Supporting our case is the sharp fall of the RSI indicator below the 50 threshold and the angle of its steepness, highlighting the abrupt pivot in direction of prices mentioned above but also the crossover of price action below both the 12 and 26 EMA lines, which no longer act as support and are instead signaling a shift in trend.

Should the bearish sentiment strengthen further, we would reasonably expect to see WTI smashing the 67.00 (S1) support line and price action moving steadfast towards breaking the $65.25 (S2) area and possibly challenging the $63.60 (S3) base, which is an area last visited in May of 2023. Should the bulls find enough resolve and take over, we may see the commodity reversing course and break above the $70.00 (R1) resistance level (formerly acting as support) and move closer yet again and challenge the $72.50 (R20 resistance barrier.