CRUDEOIL Analysis
Afternoon: Crude Oil Market Analysis: US Tariff Uncertainty and Inventory Build Drive Sentiment"
Highlights:
- US crude inventories increased by 2.86 million barrels, marking the second consecutive weekly build.
- President Trump’s tariff plans on Canadian and Mexican imports add uncertainty to the energy market.
- Despite the inventory rise, crude oil prices remain range-bound as investors focus on geopolitical factors.
Overview:
Crude oil prices remained steady despite a reported build in US crude inventories, as market participants focused on the impact of upcoming US tariffs on Canadian and Mexican imports. The American Petroleum Institute (API) reported a 2.86 million barrel increase in US crude stocks for the week ending January 28th, 2024, following a 1 million barrel rise the previous week. However, this fell short of market expectations of a 3.7 million barrel build.
Additionally, the Energy Information Administration (EIA) highlighted that Canada supplied 3.9 million barrels per day (bpd) of crude oil to the US in 2023, making up nearly half of total US imports, while Mexico supplied approximately 733,000 bpd.
Investors are closely watching the White House's confirmation that President Donald Trump plans to implement a 25% tariff on Canadian and Mexican oil imports starting Saturday, with potential additional tariffs on China. These developments are expected to influence global oil supply dynamics and overall market sentiment.
Technical Analysis
Support & Resistance Levels:
- Crude Oil Spot Price: Immediate support at $72.50, with further downside risk if breached towards $71.50. Resistance is seen at $75.00, and a break above this level could push prices toward $76.50.
- MCX Crude Oil: Support at ₹6,240, resistance at ₹6,450.
Technical Indicators:
- Relative Strength Index (RSI): Currently at 52, indicating neutral momentum with a slight bearish bias.
- Moving Averages: 50-day EMA at $73.80, acting as immediate resistance; 200-day EMA at $70.90, providing long-term support.
- MACD: Slightly bearish crossover suggests potential downside in the short term.
- Volume Analysis: Decreasing volumes indicate consolidation before a potential breakout or further decline.
Trading Strategy:
- Sell on a rise around $74, targeting $72.80, with a stop loss above $75.
- Long positions can be considered if prices drop to $71.50, with a target of $73.50.
Market Outlook:
The crude oil market remains highly sensitive to geopolitical factors, particularly US tariff policies and OPEC+ responses. While the short-term price action is influenced by inventory data, the long-term trend will depend on how trade policies impact demand and supply flows. Market participants should remain cautious, considering both fundamental and technical indicators before making trading decisions.
As the market awaits further clarity on tariffs and upcoming economic data releases—including German GfK Consumer Climate, Euro Zone Private Loans y/y, and US Goods Trade Balance—volatility is expected to persist.
Support and Resistance Levels:
