Oil News: WTI crude oil remains bearish on oversupply fears

• Recently suffering its worst 6-day performance in over three years, WTI crude oil has recently found support, trading ~15% higher than lows made earlier this month
• Currently trading around $63.65 per barrel, WTI will need to break resistance held around $66.07 to extend rally from lows
• Fresh US sanctions on Iranian energy exports could raise some questions on global supply, with no recent progress made on nuclear negotiations

With recent weeks hallmarked by a less-than-stellar economic outlook coupled with a low market appetite for risk, the consequent fallout has been decisively negative for world oil prices.

Having already surrendered gains made earlier this year, concerns about the future of global trade, compounded by fears of a potential supply glut, have recently spelled trouble for oil, falling to multi-year lows of around $55.23 per barrel (WTI) on April 9th.

Having since found support amid a brief period of comparative market optimism, WTI will need to break resistance around $66.07 to extend gains further.

With the consumption of oil inextricably linked to industry, manufacturing, and general economic prosperity, recent announcements regarding tariffs and the associated disruption in trade were felt in full force by the oil markets.

Following the announcement of reciprocal tariffs on April 2nd, otherwise known as “Liberation Day”, uncertainty on the future of global trade, and a potential for escalating trade wars would send WTI prices into a tailspin, achieving fresh lows unseen since 2021.

Having agreed to a 90-day pause in reciprocal tariffs since, WTI pricing has been able to stablise, hoping that Trump and his administration can successfully reach amicable trade agreements with key trading partners, like the European Union and China.

The latter is not only currently subject to a 145% levy on most imports to the United States, but also the second-highest consumer of oil globally, making any developments in US-China trade agreements particularly poignant for the future of WTI.

At the time of writing, the White House has made some suggestions that progress is being made on this front, but only time will tell what the likely terms of this agreement could be.

As for WTI pricing, any suggestion of a further expansion of trade tariffs or worsening of trade relations will likely negatively impact oil pricing in the short term, with the opposite being true if the US can reach agreements with key trading partners.

With tensions high amid a slump in oil manufacturing profitability, recent OPEC policy that maintains a commitment to an increase in production has come under scrutiny by some party members.

Most noticeably, this comes by way of Kazakhstan, which recently made commitments to prioritise ‘national interest’ rather than the demands of OPEC+. Ranking 12th in world oil production last year, Kazakhstan will not be the first to exceed production quotas, with non-compliance a rising issue amongst ranks.

With US oil inventories falling in Wednesday’s session, markets now turn their attention to OPEC’s next meeting scheduled for May 5th.

With sanctions targeting Iranian energy exports recently renewed, some questions are to be asked regarding how recent developments will affect oil supply in the Middle East.

Having previously offered relief from sanctions when compliant with the United States' demands to limit its nuclear program, recent sanctions have expanded in scope to now cover Liquid Petroleum Gas (LPG), a key export of the Iranian economy.

While discussions are ongoing, markets will remain tentative. Any suggestion of disruption to supply could positively affect WTI pricing.

• With price failing to break above the 21-day daily EMA in Wednesday’s session, the short-term outlook for WTI remains bearish. Currently trading in a period of consolidation, if price breaks below the ~$62.51 level, we can likely expect further moves to the downside

• When using the ADX on the daily timeframe, trend strength is observed to be falling, but remains a ‘strong trend’. All other factors being the same, this suggests the current bearish trend is set to continue in the short term