Oil Rises on Supply Concerns and Tariff Tensions
Oil prices gained momentum after new US government data showed a drop in inventories, suggesting tighter short-term supplies. West Texas Intermediate rose 0.9%, closing near $70 a barrel — its highest this month.
The data revealed a 3.34 million-barrel decline in US stockpiles last week, pushing total inventories to the lowest in a month. Gasoline levels also fell, signaling stronger demand.
Bullish Sentiment Returns to the Oil Market
This latest rally marks a turnaround from earlier bearish sentiment. Traders are now buying bullish oil options, betting on higher prices. The shift comes as President Donald Trump intensifies pressure on Iranian exports and prepares new tariffs on Venezuelan oil and gas.
“The market is finding support from short-term supply tightening, putting demand concerns on the back burner,” said Fawad Razaqzada, analyst at City Index and Forex.com.
Traders Flip Positions as Oil Sentiment Shifts
Commodity trading advisers, known for amplifying market moves, have flipped bullish on Brent, according to Bridgeton Research Group.
For West Texas Intermediate, net short positions fell from 82% to 54%, reflecting a growing belief that oil prices may keep climbing.
Volatility Lingers Despite Near-Term Support
Despite the bullish signals, top traders at the FT Commodities Global Summit in Lausanne remain cautious. They say global oil markets face persistent downside risks due to geopolitics, tariffs, and uncertain OPEC+ policies.
Oil remains down over 10% from its January peak. Trump’s ongoing trade war and retaliatory measures from nations like China, Venezuela, and Iran are stoking global volatility.
Trump’s Sanctions Policy Adds to Market Uncertainty
The White House is preparing a new round of tariffs, including duties on nations buying oil from Venezuela and Iran. These measures may restrict supply further and increase costs for refiners worldwide.
Traders warn that such aggressive policy shifts can shock the market. If OPEC+ raises production while demand weakens, oil prices could tumble again.
Technical Signals Point Toward More Upside
Technical traders are watching closely as WTI approaches a key resistance level at $70. A breakout could fuel another leg up for oil.
Momentum indicators show strengthening bullish trends, while falling inventories and geopolitical risks add fundamental support.
Outlook Remains Split Among Analysts
While short-term optimism is building, the broader outlook for oil in 2025 remains mixed. Demand concerns from China and Europe, combined with US political unpredictability, continue to cloud forecasts.
Still, analysts agree that tightening inventories and geopolitical risks are likely to keep oil prices supported in the near term.