Light crude oil futures fell on Friday due to uncertainty in the market, with key resistance levels identified. Iraq’s plans to increase oil exports and U.S. tariff threats contribute to the bearish outlook. Saudi Arabia may reduce selling prices for April crude shipments, reflecting broader market pressures. Traders should observe resistance and support levels closely, given the caution prevailing in investor sentiment.
On Friday, light crude oil futures experienced a decline as they remained steady within Thursday’s trading range, suggesting indecision among traders and the likelihood of increasing volatility in the market. Significant resistance remains at $70.35, a Fibonacci level, and $70.59, which is the 200-day moving average. A decisive breakout above this range could potentially lead to a rally towards the 50-day moving average and pivot points at $72.02 and $72.08. Conversely, ongoing trading below the retracement zone and the 200-day moving average may trigger aggressive selling, risking a decline to the week’s low of $68.36, with $67.06 identified as next major support.
As of 11:11 GMT, light crude oil futures were trading at $69.34, down $1.01 or 1.44%. Oil prices declined by 1% on Friday, marking the first monthly decrease for both Brent and WTI benchmarks since November. This downturn is attributed to U.S. tariff threats and Iraq’s announcement to resume exports of oil from the Kurdistan region at a volume of 185,000 barrels per day, which may gradually increase.
The decision raises questions over Iraq’s compliance with OPEC+ commitments, as highlighted by Harry Tchilinguirian of Onyx Capital Group. If OPEC+ postpones its planned return of voluntary oil cuts in April, Iraq’s increased output could nullify these actions, contributing to heightened supply pressures in the market. Investor confidence has also waned due to U.S. President Donald Trump’s tariff policy announcements, set to take effect on March 4, including a 25% tariff on Mexican and Canadian imports and an additional 10% on Chinese goods.
The escalation of tariffs raises alarms about global demand, with warnings from Ole Hansen of Saxo Bank regarding potential repercussions on economic growth, inflation, and crude oil consumption. The possibility of a U.S. economic slowdown, coupled with the expectation of rising Russian oil supply if peace developments in Ukraine proceed, further diminish risk appetites among investors. Recent reports of higher-than-expected U.S. jobless claims and signs of decelerating economic growth during the fourth quarter have also contributed to market apprehension.
In response to market conditions, Saudi Arabia, the leading oil exporter globally, is poised to slightly reduce its official selling prices for April crude shipments to Asia, with traders predicting price cuts of 20 to 65 cents per barrel for Arab Light crude. This would set the April prices at a premium between $3.25 and $3.70 per barrel relative to the Oman/Dubai average, compared to a premium of $3.90 in March. These expected adjustments reflect minor declines in benchmark prices and weaker refining margins across Asia.
As the crude oil market faces continued downward pressure, critical technical levels indicate that unless prices surpass the $70.59 resistance threshold, futures may trend down toward $67.06. The macroeconomic landscape, marked by escalating tariff tensions and potential increases in Iraqi and Russian oil supplies alongside diminished demand in Asia, paints a bearish picture. Traders should monitor for a weekly close above $70.40, which could herald potential short-term support; nevertheless, the prevailing sentiment remains one of caution.
In summary, the crude oil market is currently under significant pressure due to a combination of tariff concerns, increased Iraqi oil exports, and signs of slowing economic growth. Despite potential signals for upward movement, critical resistance levels remain unbroken, leaving the outlook bearish. Traders are advised to remain vigilant as market conditions evolve, particularly regarding any changes in OPEC+ policies and international economic factors.
Original Source: www.fxempire.com
