Oil News: Prices Climb as Demand Outlook Improves Amid Dollar Weakness

Oil Prices Edge Higher but Downside Risks Persist

Light crude oil futures are trading slightly higher on Tuesday, consolidating after last week’s sharp decline. However, the market remains under key technical levels, with the 200-day moving average at $70.35 and the 50-day moving average at $71.85. This suggests that oil is still in a “sell the rally” mode, with renewed selling pressure potentially driving prices toward key support levels at $65.20, $64.75, and $73.87.

Dollar Weakness Provides Temporary Support

Oil prices erased early losses and turned positive as the U.S. dollar weakened, making crude more attractive for overseas buyers. The dollar index (.DXY) hit a four-month low, providing some short-term relief to oil markets. However, broader concerns over a potential U.S. recession and the impact of tariffs on global economic growth kept gains in check.

Investor attention remains on OPEC+ as the group prepares to increase production in April. Market participants are looking for further clarity on whether the cartel will proceed with its planned output hike or adjust strategy based on price levels. Brent crude has found strong support around the $70 per barrel level, which could trigger a technical rebound, according to DBS Bank’s energy sector analyst Suvro Sarkar.

OPEC+ Flexibility to Dictate Price Action

While OPEC+ is still on track to increase supply in April, Russian Deputy Prime Minister Alexander Novak suggested that further decisions will be market-driven. If oil prices remain below $70 per barrel for an extended period, the group may pause output hikes or consider production cuts to prevent additional downside.

Analysts also highlight that OPEC+ is monitoring global economic conditions, including U.S. protectionist policies affecting key oil suppliers. President Trump’s tariff actions against Canada, Mexico, and China continue to inject uncertainty into demand forecasts. The stock market slump on Monday, where the S&P 500 and Nasdaq suffered sharp declines, further amplified fears of economic contraction.

U.S. Inventory Data and Inflation Reports in Focus

Traders are now awaiting key U.S. inflation data due on Wednesday, which will provide insights into the Federal Reserve’s interest rate stance. A high inflation reading could reinforce expectations of tighter monetary policy, potentially pressuring oil demand.

Meanwhile, U.S. crude stockpiles were expected to have risen last week, while gasoline and distillate inventories likely declined, according to a preliminary Reuters poll. Official data from the American Petroleum Institute (API) is due later today, followed by the Energy Information Administration (EIA) report on Wednesday.

Market Outlook: Cautiously Bearish with OPEC+ in Play

Despite the short-term rebound, oil prices remain vulnerable to further downside risks. The market’s failure to break above key moving averages signals continued selling pressure. OPEC+ remains the key wildcard—if prices dip below $70 for a sustained period, supply adjustments may follow. Until then, traders are likely to adopt a cautious stance, with potential for short-covering rallies but a broader bearish outlook.

More Information in our Economic Calendar.