Arslan Butt•Thursday, January 23, 2025•2 min read Add an article to your Reading ListRegister now to be able to add articles to your reading list."
Arslan Butt•Thursday, January 23, 2025•2 min read
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Oil prices extended their losses in Asian trading on Thursday, with Brent crude settling at $79.00 per barrel and WTI crude at $75.44, marking consecutive days of declines.
Market sentiment remains under pressure as investors weigh the impact of U.S. President Donald Trump’s proposed tariffs and energy strategies on global demand and supply. Analysts cite expectations of increased U.S. oil production and easing geopolitical risks as key factors contributing to the downward pressure.
Senior market analyst Priyanka Sachdeva at Phillip Nova noted, “The oil market is balancing mixed drivers, from President Trump’s pro-drilling stance to de-escalation in geopolitical tensions, which has softened the supply risk premium.”
Trump’s recent tariff threats, including a potential 25% duty on imports from Canada and Mexico, and a 10% tariff on Chinese goods, have raised concerns about demand from major energy consumers. The broader implications of these policies on global trade could dampen oil demand growth in the near term.
Market Eyes Impact of U.S. Energy Policies
President Trump’s national energy emergency declaration, aimed at reducing regulatory restrictions on infrastructure and facilitating new drilling projects, has fueled market uncertainty. While these measures could boost production, analysts remain cautious about the short-term effects.
“The pace of U.S. production growth remains uncertain despite policy changes,” noted Sachdeva. “Markets are waiting for tangible output increases before adjusting expectations.”
In addition, Trump’s pledge to impose further sanctions on Russia, if diplomatic efforts fail, is adding another layer of complexity to the oil market. The potential for additional sanctions on energy exports could lead to further market volatility.
U.S. Inventory Data Adds to Bearish Sentiment
Market participants are closely monitoring U.S. inventory data, which indicated a build of 958,000 barrels in crude oil stockpiles for the week ending January 17, according to American Petroleum Institute (API) figures.
Key takeaways from the latest report include:
- Gasoline inventories rose by 3.23 million barrels, signaling weaker demand.
- Distillate stockpiles increased by 1.88 million barrels, adding downward pressure on prices.
- Crude oil inventories rose modestly, reflecting a well-supplied market.
These figures suggest that demand may not be keeping pace with supply, further contributing to the recent price weakness.
Conclusion:
While oil prices remain under pressure from a mix of policy uncertainty and rising inventories, traders are closely watching key technical levels. WTI crude faces immediate resistance at $76.28, with further hurdles at $77.50 and $79.02. A break below $75.04 could trigger additional declines toward $74.02 and $72.85. The market outlook hinges on how Trump’s policies unfold and their broader implications on energy demand.
Key Insights:
- Oil prices face headwinds from Trump’s tariff threats and energy policies.
- U.S. crude inventories rose by 958,000 barrels, adding pressure.
- WTI remains bearish below $76.28; support seen at $75.04 and $74.02.
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
www.fxleaders.com