Oil Markets Balance Trade Hopes and Sanction Fears

Key Takeaways:

*Oil prices held near $60 as optimism over U.S.–China tariff reductions lifted sentiment across energy markets.

*Renewed U.S. sanctions on Russian exports injected a mild supply risk premium, offsetting weak demand signals.

Market Summary: 

Oil markets traded sideways on Thursday but remained underpinned by a confluence of trade optimism and fresh geopolitical supply concerns. Brent hovered near $64.60/bbl and WTI near $60 as investors weighed the positive demand implications of U.S.–China tariff reductions against tightening U.S. sanctions on Russian energy. The tariff rollback boosted sentiment toward global trade and manufacturing activity, supporting expectations of stronger oil consumption through Q4. However, a stronger dollar and persistent doubts over China’s real demand recovery capped upside momentum.

On the geopolitical front, sanctions risk returned to the spotlight after a Russian oil tanker reportedly turned back under threat of U.S. penalties, highlighting renewed enforcement efforts aimed at constraining Moscow’s export routes. In a parallel development, Russia’s Lukoil announced plans to sell its international assets to Gunvor following expanded U.S. sanctions—an event that traders interpreted as a sign of deeper structural disruptions to Russian crude supply chains. These headlines injected a mild risk premium into the oil complex, supporting prices despite subdued global demand indicators.

Meanwhile, physical market signals remain mixed. OPEC+ output discipline continues to underpin the market, but U.S. inventories and refinery runs are showing signs of seasonal softening. Refiners are entering maintenance cycles, while recent API data suggested modest builds in crude stocks, tempering bullish enthusiasm. Traders are also watching for official DOE inventory figures later this week for confirmation of demand trends.

Adding another dimension, the easing of U.S.–China trade friction has also revived expectations for stronger energy trade flows between the two countries—particularly in LNG and refined products potentially improving medium-term demand projections. Yet, with the dollar firming and global growth still fragile, oil’s rally remains constrained.

In the near term, WTI’s price action is expected to consolidate within a $58–$62 range, while Brent may face resistance around $66–$68. A breakout would likely require a decisive supply shock or clear evidence of accelerating demand. Traders will continue to monitor sanctions developments, OPEC+ communications, and U.S.–China trade headlines for fresh direction cues.

Technical Analysis 

USOIL, H4: 

WTI crude oil continues to consolidate on the chart after a sharp rebound from the $55.00 region, with price now oscillating near the $60.00 handle. The recent recovery broke out of a descending channel, but bullish momentum appears to be losing traction as price action meets resistance near $61.90 which is a level that previously acted as a major pivot. Sellers have since capped gains, keeping oil in a tight range between $58.30 and $61.90.

From a momentum standpoint, RSI hovers around 47, signaling indecision and limited directional bias after a short-lived overbought phase. The MACD lines are flattening just below the zero line, suggesting fading bullish momentum and potential for a near-term pullback if buying pressure continues to weaken.

Overall, WTI’s short-term bias remains neutral to slightly bullish as long as prices hold above $58.10. A decisive break above $61.90 would open the door toward $63.30 and $65.00, while failure to hold above $58.30 could invite renewed selling toward $56.40 and $55.00 which are the levels aligned with the prior channel’s lower boundary.

Resistance Levels: 61.90, 63.30

Support Levels: 60.10, 58.30