Crude Oil Under Pressure Amid Rising U.S. Inventories and Trade Policy Uncertainty
Market Overview
Crude oil prices continue to face selling pressure despite a temporary pause in the downward momentum on Thursday’s trading session. The medium-term bearish trend remains intact as traders position themselves ahead of potential tariffs on Mexico and Canada, two of the largest oil suppliers to the United States. President Donald Trump’s administration has signaled intentions to impose new trade barriers, heightening concerns about potential disruptions to energy trade flows.
Additionally, market participants are closely monitoring the upcoming OPEC+ meeting scheduled for February 3, where oil producers are expected to address U.S. efforts to push for lower oil prices. With the Biden administration’s energy policies now overturned, Trump’s renewed emphasis on domestic energy independence and increased oil production is expected to put additional pressure on OPEC+ to respond.
Technical Analysis
On the four-hour timeframe, crude oil remains in a downtrend that has persisted since January 15. The price is currently trading below the 100-period and 34-period moving averages, reinforcing the bearish outlook. Sellers have managed to keep oil prices below the key support level of 76.926, suggesting further downside potential.
If the downward momentum persists and oil breaks decisively below 76.926, sellers could target the next key levels at 76.475, 75.798, and 75.269. The RSI and MACD indicators confirm the dominance of selling pressure, with momentum continuing to favor the bears.
Conversely, should buyers regain control, the price will face immediate resistance at 77.559, followed by a key reversal zone at 78.583. A sustained move above 78.583 would be required to invalidate the bearish trend and shift sentiment toward the upside.
Key Technical Levels
- Resistance Levels: 76.926, 77.559, 78.583
- Support Levels: 76.475, 75.798, 75.269
Fundamental Factors
The recent increase in U.S. crude oil inventories has reinforced downside pressure on oil prices, reflecting weaker demand conditions. Additionally, Trump’s energy policies, which emphasize boosting domestic production and reducing energy costs, continue to weigh on market sentiment.
Looking ahead, oil traders are focusing on the February 3 OPEC+ meeting, where key producers, including Saudi Arabia and Russia, will decide how to respond to U.S. demands for lower oil prices. Any signs of production cuts or supply management measures could help stabilize prices, while an inaction from OPEC+ may further accelerate the current downtrend.
Conclusion
Oil prices remain under pressure, with rising U.S. inventories and potential trade restrictions on Mexico and Canada adding to the bearish outlook. Unless OPEC+ signals supply cuts, the path of least resistance remains to the downside, with sellers in control below 76.926.
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