Oil News: Bearish Pressure Builds as U.S. Crude Inventories Surge, Demand Fears Loom

Oil Prices Slip as U.S. Crude Inventories Surge and Tariff Uncertainty Weighs

Light crude oil futures are trading lower early Wednesday, extending a recent downward move. Despite the ongoing nine-day sell-off, price action suggests consolidation, as traders attempt to establish a support base near key technical levels.

The 200-day moving average at $70.94 and the 50-day moving average at $70.39 remain critical to sustaining the intermediate and long-term uptrend. A breach below these levels could invite further selling pressure. On the upside, the nearest resistance stands at $75.47, with a break above this pivot potentially reversing the current bearish momentum.

At 10:17 GMT, Light Crude Oil Futures are trading $73.13, down $0.64 or -0.87%.

Crude Oil Faces Pressure from Rising U.S. Stockpiles

Oil prices have dipped following a reported increase in U.S. crude inventories, signaling weaker demand. The American Petroleum Institute (API) reported a rise in crude and gasoline stockpiles last week, while distillate inventories declined. Traders are now looking ahead to the official data from the Energy Information Administration (EIA), which is set for release later today.

Concerns over an oversupplied market are compounded by expectations that OPEC+ will stick to its planned production increases starting in April. With supply disruptions easing—particularly in Libya, where exports have resumed—the market is struggling to find bullish catalysts in the near term.

Trade Tariff Risks Cloud the Demand Outlook

Investor sentiment is further dampened by looming tariff threats from the U.S. administration. The White House reaffirmed plans to impose a 25% tariff on Canadian and Mexican imports starting Saturday. Canada, supplying 3.9 million barrels per day (bpd) to the U.S., accounts for roughly half of total U.S. imports. Mexico contributes an additional 733,000 bpd. Any disruption in cross-border trade flows could create volatility in oil prices, though potential supply tightness may provide temporary support to U.S. crude benchmarks.

According to analysts, crude prices continue to react sharply to shifting trade policies, with traders positioning for possible demand-side consequences if tariffs go into effect. A stronger U.S. dollar, driven by protectionist trade measures, could also weigh on global oil demand by making crude more expensive for foreign buyers.

OPEC+ Meeting and Geopolitical Factors in Focus

Market participants are also watching developments within OPEC+ ahead of a key ministerial meeting next Monday. The cartel’s recent discussions have been overshadowed by geopolitical tensions, particularly efforts by the U.S. to pressure Russia via lower oil prices. Washington’s push for increased OPEC+ production is seen as an attempt to mitigate inflation and reduce domestic gasoline costs, but whether Saudi Arabia and its allies comply remains uncertain.

Any signals from OPEC+ regarding potential adjustments to output quotas could influence price direction in the coming sessions. Additionally, broader geopolitical risks, including ongoing tensions between Russia and Ukraine, continue to be a factor in trader sentiment.

Market Outlook: Cautious Bearish Bias Prevails

With growing U.S. crude stockpiles, trade tariff concerns, and stable OPEC+ production plans, the oil market remains under pressure. Prices could see further downside if EIA data confirms another significant inventory build. However, a break above resistance at $75.47 could shift momentum higher. For now, traders are maintaining a cautious bearish bias, with volatility expected as geopolitical and macroeconomic uncertainties unfold.