Oil News: Traders on Edge as Crude Demand Concerns and Global Risks Weigh on Prices

Crude Holds Key Support as Traders Await Catalyst

Light crude oil futures finished marginally higher on Tuesday but remain near critical support levels from late last year at $65.20, $64.75, and $63.87. The current consolidation suggests that sellers are reducing positions while some profit-taking is occurring. However, the lack of strong directional movement indicates that traders are waiting for a catalyst to break the range.

Technical indicators highlight significant upside potential if momentum shifts, with resistance at a short-term Fibonacci level of $70.35 and the 200-day moving average at $70.42. However, with prices still below both the 50-day ($71.84) and 200-day moving averages, the market remains in a “sell the rally” mode. Any bullish breakout would require a strong fundamental driver to overcome these resistance levels.

On Tuesday, Light Crude Oil Futures settled at $66.25, up $0.22 or +0.33%.

Weaker Dollar Supports Oil, But Economic Concerns Cap Gains

Oil prices edged slightly higher on Tuesday, supported by a weakening U.S. dollar, which hit a four-month low. A weaker dollar makes crude more affordable for international buyers, offering short-term price support. However, broader economic concerns weighed on the market, limiting gains.

Equity markets remained under pressure, with U.S. stocks extending losses. The S&P 500 posted its steepest decline since December 18, while the Nasdaq tumbled 4%, its worst single-day drop since September 2022. Weakness in risk assets has kept oil traders cautious, reinforcing the fragile sentiment.

Further complicating market sentiment, U.S. President Donald Trump announced a new 25% tariff on all steel and aluminum imports from Canada, escalating trade tensions. While protectionist policies have contributed to volatility, the impact on crude demand remains uncertain. Investors are now looking ahead to U.S. inflation data due Wednesday, which could influence the Federal Reserve’s rate decisions and, in turn, oil market dynamics.

Supply-Side Pressures and OPEC+ Response

The U.S. Energy Information Administration (EIA) raised its crude production forecast, projecting output at 13.61 million barrels per day (bpd) for 2025, surpassing prior estimates. Meanwhile, crude stockpiles rose by 4.2 million barrels last week, according to industry data, adding further pressure to the market. Official government data on crude inventories will be released Wednesday, providing additional insight into supply trends.

On the OPEC+ front, the group has announced plans to increase production in April, though recent price declines have raised doubts about whether the strategy will hold. Russia’s Deputy Prime Minister Alexander Novak confirmed that the planned output increase remains in place but signaled that the group may reassess its position if prices fall further.

Brent crude is holding strong support around $70 per barrel, with some analysts expecting a potential rebound. However, OPEC+ remains flexible in its supply strategy, particularly given ongoing geopolitical uncertainties, including U.S. policy toward Iran and Venezuela.

Market Outlook: Bearish Bias Holds Until Stronger Catalyst Emerges

Crude oil remains in a vulnerable position, with key technical levels acting as a battleground for traders. While short-term support is holding, the bearish undertone persists due to economic concerns, rising U.S. output, and uncertainty surrounding OPEC+ supply plans.

A break below $70 per barrel in Brent or $65 in WTI could accelerate selling, forcing OPEC+ to reconsider its production stance. Conversely, any relief from trade tensions or stronger-than-expected economic data could trigger a technical rebound. Until a decisive catalyst emerges, traders are likely to remain cautious, selling into rallies while monitoring key economic and geopolitical developments.

More Information in our Economic Calendar.