Crude Oil Analysis
Afternoon: Crude Oil Price Decline Amid OPEC+ Production Plans and Trade Tensions
Highlights:
- Crude oil dipped toward $68 as OPEC+ announced plans to restart suspended production, facing pressure from the US.
- Trade concerns escalate, with new US tariffs on Mexico, Canada, and China raising fears of reduced global energy demand.
- Key support and resistance levels: Support at $66.80, resistance at $69.20, with a sell-on-jump strategy advised around $68.25.
Overview:
Crude oil prices experienced a decline toward $68 per barrel after OPEC+ signaled its plan to restore 2.2 million barrels per day (bpd) of previously suspended production. This decision follows increasing pressure from US President Donald Trump, who has urged OPEC+ to take action to lower global oil prices. The production increase is scheduled to begin on April 1, after multiple delays.
In addition to production-related factors, concerns about weakening global demand have also contributed to the decline in oil prices. Investors are cautious due to the impact of rising trade tensions, particularly the recent US decision to impose tariffs on imports from Mexico, Canada, and China. These measures, including a 25% tariff on Mexican and Canadian imports and a second round of 10% tariffs on Chinese goods, could slow global economic growth, thereby reducing energy consumption.
Further uncertainty stems from ongoing geopolitical tensions. Hopes for a resolution to the Russia-Ukraine conflict have dimmed following a contentious meeting between Ukrainian President Volodymyr Zelensky and President Trump. This has added another layer of risk sentiment in the market.
Technical Analysis: Support and Resistance Levels
Crude oil prices are currently testing key technical levels:
- Support Levels: The first support level is seen at $66.80, which could act as a crucial downside threshold.
- Resistance Levels: Resistance is identified at $69.20, a level that could limit upside movements.
- MCX Prices: On the Indian Multi Commodity Exchange (MCX), crude oil prices are expected to find support at 5880 and resistance at 6100.
Trading Strategy
Given the current market outlook and technical levels, a sell-on-jump strategy is recommended:
- Entry Point: Short positions can be considered around $68.25.
- Target: A downside target of $67.00 is suggested.
- Stop Loss: To manage risk, a stop-loss should be placed above $69.20.
This strategy accounts for the potential downside risks associated with increased OPEC+ production and global economic uncertainties.
Macroeconomic Indicators to Watch
Several key economic data releases from Europe are expected to impact market sentiment:
- French Government Budget Balance
- Spanish Unemployment Change
- Italian Monthly Unemployment Rate
- Eurozone Unemployment Rate
Traders should monitor these indicators closely, as they can influence broader market movements and energy demand forecasts.
Support and Resistance Levels:
