Oil News: WTI Futures Rally as Demand Rebounds, Technicals Signal More Upside

Crude Oil Extends Gains as Supply Risks Offset Trade Tariff Concerns

Oil prices continued their upward momentum on Tuesday, bolstered by tightening supply signals from Russia and Iran. Traders have been quick to re-enter long positions after crude built a support base inside the $72.11 to $70.38 retracement zone, pushing prices above key moving averages. However, lingering concerns over U.S. trade tariffs pose a potential cap on further gains.

At 10:19 GMT, Light Crude Oil futures are trading $73.23, up $0.91 or +1.26%.

Technical Strength Signals Further Upside

Light crude futures have gained traction after breaking through the 200-day moving average at $70.74 and the 50-day moving average at $71.24. With the market now on the strong side of these key levels, a run toward the short-term 50% retracement at $74.94 looks increasingly likely. This technical setup suggests additional upside potential, provided fundamentals continue to support the move.

Russian and Iranian Supply Pressures Fuel the Rally

Concerns over tightening supply played a key role in Tuesday’s rally. Russian crude production slipped to 8.962 million barrels per day in January, falling 16,000 barrels below its OPEC+ quota. The shortfall, though marginal, eases oversupply fears and reinforces bullish sentiment.

Additionally, U.S. sanctions on Russian oil shipments to China and India have created logistical bottlenecks, limiting export flows from the world’s second-largest crude supplier. Iran faces similar challenges, with new U.S. sanctions targeting its oil networks. These supply disruptions have reignited buying interest after weeks of bearish sentiment.

Trade Tariffs and Fed Policy Pose Demand-Side Risks

While supply-side constraints support higher prices, trade tensions remain a headwind for demand. On Monday, President Trump raised steel and aluminum tariffs to 25%, escalating the risk of a multi-front trade war. The move could slow economic growth, indirectly weighing on global energy consumption.

Further adding pressure, China has imposed a 10% tariff on U.S. crude imports in response to Trump’s latest round of levies. This retaliatory measure dampens demand for American barrels, particularly in Asia, and could impact WTI pricing in the near term.

Meanwhile, the Federal Reserve’s decision to delay rate cuts adds another layer of uncertainty. With inflationary pressures rising under Trump’s economic policies, the Fed is holding off on easing monetary policy, which could limit growth and weigh on crude demand projections.

Market Outlook: Bullish Bias with Caution on Demand Risks

Oil prices remain on an upward path, supported by tightening supply and technical strength. However, trade-related demand risks and uncertain monetary policy could temper the rally. As long as supply constraints persist, crude prices have room to climb, but traders should monitor economic indicators and tariff developments closely. A breakout above $74.94 in WTI could trigger further gains, but any signs of slowing demand may invite fresh selling pressure.

More Information in our Light Crude Oil futures.