Bearish Outlook for Oil Market Amid Tariff Concerns and Iraqi Export Plans
Light crude oil futures have declined amid tariff concerns and increased Iraqi exports, hovering around $69.34. Resistance is noted at $70.35 and $70.59, while sustained trading below $68.36 could trigger further declines. The bearish outlook is influenced by U.S. tariffs and softer demand stemming from a potential economic slowdown.
On Friday, light crude oil futures experienced a decline, remaining within the range established the previous day, indicative of trader uncertainty and potential for increased volatility. The market faces resistance at $70.35, supported by the Fibonacci level and the 200-day moving average at $70.59. A breakthrough beyond this range could lead to a rally toward pivot levels of $72.02 and $72.08, while sustained trading below these levels may attract sellers, potentially lowering prices to $68.36, with the possibility of further decline to $67.06 if this support is breached.
As of 11:11 GMT, light crude oil futures are priced at $69.34, showing a decrease of $1.01 or 1.44%. Oil prices dropped by 1% on Friday, marking the first monthly slump for both Brent and WTI since November. Contributing factors include U.S. tariff threats and Iraq’s plan to resume oil exports from the Kurdistan region, with intentions to export 185,000 barrels per day initially and gradually increasing volumes.
This development raises concerns about Iraq’s compliance with OPEC+ production commitments, as highlighted by Harry Tchilinguirian from Onyx Capital Group. Should OPEC+ decide not to resume the 120,000bpd voluntary cuts in April, the increase in Iraqi output might counterbalance these cuts, exerting additional pressure on crude oil supply. Additionally, sentiment has been negatively influenced by U.S. President Donald Trump’s upcoming tariffs on imports from Mexico, Canada, and China, raising fears over global demand.
Concerns about a potential U.S. economic downturn, alongside speculation regarding an increase in Russian oil supply contingent upon peace talks in Ukraine, have further reduced market risk appetite. Add to this, higher-than-expected jobless claims in the U.S. and indications of economic slowdown in the fourth quarter have created additional market pressures.
Saudi Arabia, the largest global oil exporter, is projected to slightly reduce its official selling prices for April shipments to Asia. Traders anticipate cuts of 20 to 65 cents per barrel for Arab Light crude, adjusting April prices to a premium of $3.25 to $3.70 against the Oman/Dubai average, lower than March’s $3.90 premium. This reflects slight declines in benchmark prices and weakened refining margins.
With China poised to increase imports of Russian and Iranian oil in March, there could be further challenges to Saudi crude demand. The overall crude oil market continues to show signs of potential downward movement. Critical technical levels indicate that unless prices surpass the $70.59 resistance, futures might trend toward $67.06. A prevailing macroeconomic backdrop, including tariff tensions, rising Iraqi and Russian oil supplies, and lukewarm demand in Asia, suggests a bearish outlook for the crude market.
The current state of light crude oil futures indicates a bearish outlook due to several market factors including tariff concerns, rising Iraqi oil exports, and weakening demand in Asia. Critical resistance and support levels are closely monitored, with the possibility of significant shifts in market dynamics should prices breach key thresholds. Traders remain cautious as they navigate an uncertain economic landscape.
Original Source: www.fxempire.com