Light crude oil futures fell on Friday, reflecting uncertainty amid tariff concerns and Iraq’s renewed oil exports. Resistance levels at $70.35 and $70.59 are capping gains, and sustained trading below $68.36 could trigger further declines. Increasing Iraqi output raises compliance concerns regarding OPEC+, and President Trump’s impending tariffs add pressure to the crude market, leading to a bearish outlook overall.
On Friday, light crude oil futures declined, trading within the previous day’s range, indicating trader uncertainty and the potential for increased market volatility. Resistance levels at $70.35 and $70.59, represented by key Fibonacci and 200-day moving average levels, are currently restricting upward movement. If prices successfully breach this range, a rally may target the 50-day moving average around $72.02.
Conversely, continued trading below the retracement zone and the 200-day moving average could invite significant selling, potentially pushing prices down to this week’s low of $68.36. A fall beneath this threshold may lead to a deeper decline, identifying $67.06 as the next major support level.
As of 11:11 GMT, light crude oil futures stand at $69.34, reflecting a decrease of $1.01 or 1.44%. Oil prices overall dipped 1% on Friday, indicating that both Brent and WTI are likely to experience their first monthly decline since November. This situation arises from concerns regarding U.S. tariff threats and Iraq’s renewed oil exports from the Kurdistan region, with plans to export 185,000 barrels per day.
The increase in Iraqi exports raises complications about compliance with OPEC+ production commitments. Harry Tchilinguirian of Onyx Capital Group highlighted that should OPEC+ postpone the return of 120,000 bpd of voluntary cuts in April, Iraq’s output increase might counter these efforts, amplifying supply pressures.
Market sentiment was further diminished by U.S. President Donald Trump’s announcements about tariffs. Starting March 4, a 25% tariff on goods from Mexico and Canada, along with a 10% tariff on Chinese imports, will come into effect. Ole Hansen from Saxo Bank has warned that these tariffs could negatively influence global demand and oil consumption.
Concerns of a potential U.S. economic slowdown, combined with possible increments in Russian oil supply due to advancing peace talks in Ukraine, have weakened risk appetite in the market. Additional pressure has been added by unexpectedly high U.S. jobless claims and signs indicating slowed economic growth during the fourth quarter.
Saudi Arabia, as the largest oil exporter globally, is expected to slightly reduce its official selling prices (OSP) for April shipments to Asia. Traders surveyed by Reuters predict a decrease between 20 to 65 cents per barrel for Arab Light crude oil, with April prices set at a premium of $3.25 to $3.70 per barrel over the Oman/Dubai average, down from March’s premium of $3.90.
These anticipated adjustments in prices reflect small declines in benchmark prices as well as diminished refining margins in Asia. Additionally, with China likely to increase imports of Russian and Iranian oil in March, demand for Saudi crude may face further challenges, projecting a bearish trend in the crude oil market overall.
The market appears to be under significant downward pressure. Analysts suggest that unless prices break above the $70.59 resistance level, sellers may drive futures down to the $67.06 mark. The broader context, characterized by escalating tariff tensions, potential surges in Iraqi and Russian oil supplies, coupled with weaker demand in Asia, supports a pessimistic outlook for oil prices.
Traders should be alert for a weekly close above $70.40, as this may indicate a shift towards short-term support; however, the prevailing sentiment remains one of caution.
The recent bearish stance in the oil market is largely influenced by tariff concerns from the United States and the resurgence of Iraqi oil exports. Resistance levels above $70.59 are critical, while sustained trading below $68.36 may prompt further declines. Lingering economic uncertainties, particularly regarding jobless claims and growth forecasts, coupled with supply increases, reinforce a cautious outlook for oil prices. Trader vigilance on market movements remains imperative in this volatile environment.
Original Source: www.fxempire.com
