Light crude oil futures are trading lower as tariff concerns and Iraqi export plans exert pressure on prices. Resistance is found at $70.35 and $70.59, while sustained trading below these levels may lead to declines towards $67.06. Investor sentiment is affected by U.S. tariffs and expectations of increased oil supply from Iraq and possible Russian supplies, suggesting a bearish market outlook.
Light crude oil futures have dipped on Friday, remaining within Thursday’s trading range, indicating trader hesitation and potential for volatile changes. Resistance is found at $70.35 (Fibonacci level) and $70.59 (200-day moving average), where any decisive breakout above could trigger a rally towards the 50-day moving average and pivot points at $72.02 and $72.08.
Conversely, continued trades below the retracement zone and the 200-day moving average may lead to increased selling pressure, possibly dropping prices to this week’s low of $68.36. A break below this threshold could initiate a significant decline, with $67.06 identified as the next critical support level.
As of 11:11 GMT, Light Crude Oil Futures are trading at $69.34, reflecting a decline of $1.01 or -1.44%. Oil prices fell by 1% on Friday as both Brent and WTI benchmarks are set for their first monthly drop since November, primarily due to U.S. tariff threats and Iraq’s plans to resume oil exports from the Kurdistan region, potentially raising compliance worries regarding OPEC+ commitments.
Iraq’s oil ministry announced that it intends to export 185,000 barrels per day (bpd) initially through state marketer SOMO with gradual increases expected. This may counteract OPEC+ voluntary cutbacks, especially if the return of 120,000 bpd is delayed in April, leading to intensified supply pressures.
Investor sentiment has been negatively impacted by U.S. President Donald Trump’s tariff announcements set to take effect on March 4. The proposed 25% tariffs on goods from Mexico and Canada, along with a 10% duty on Chinese imports, raise concerns over potential declines in global demand, including crude oil consumption.
Fears of a slowing U.S. economy combined with possible increased Russian oil supply if peace is achieved in Ukraine further dampens risk appetite among investors. Economic indicators such as higher-than-expected jobless claims and indications of slower growth in Q4 contribute to this bearish sentiment.
Saudi Arabia, as the leading oil exporter, is expected to modestly reduce its official selling prices (OSP) for April shipments to Asia, with an anticipated cut of 20 to 65 cents per barrel for Arab Light crude. Analysts forecast April prices will align at a premium of $3.25 to $3.70 per barrel against the Oman/Dubai average, a decrease from March’s $3.90 premium.
These adjustments signal slight decreases in benchmark prices and weakened refining margins in Asia. Additionally, with China likely to increase imports of Russian and Iranian oil, demand for Saudi crude faces further challenges amidst these changes.
The crude oil market remains vulnerable to further downward pressure, with critical technical levels suggesting that without surpassing the $70.59 resistance, futures may decline towards $67.06. Factors such as escalating tariff tensions, potential increases in Iraqi and Russian supplies, and weakened Asian demand all indicate a bearish market outlook.
Traders should monitor for a weekly close above $70.40, which might indicate impending short-term support; however, the overall sentiment remains cautious, reinforcing the need for careful evaluation moving forward.
The crude oil market is currently under pressure due to multiple factors, including U.S. tariff threats, increased Iraqi oil exports, and concerns about demand in Asia. With key resistance levels at $70.35 and $70.59, any break above this range could fuel price rallies, while sustained trading below these levels may lead to further declines, particularly towards $67.06. Overall, the outlook remains bearish amidst these challenging conditions.
Original Source: www.fxempire.com
