Crude Prices Fragile Amid Trade and Demand Fears

Key Takeaways:

*Trump’s tariffs on India and threats to Japan stir global trade fears, but oil supply remains uninterrupted for now.

*Talks with Putin and a potential ceasefire reduce geopolitical risk premium, pressuring crude despite OPEC+ cuts.

*With Fed officials acknowledging economic softening, oil markets are increasingly pricing in weaker industrial consumption.

Market Summary:

Crude oil markets remain caught in a tug-of-war between geopolitical maneuvering, potential supply disruptions, and weakening macro demand signals. Brent crude has retreated toward $67, marking an eight-week low, as sentiment is rattled by the prospect of new tariffs and uncertainty over Russian sanctions.

The latest overhang stems from President Trump’s escalating tariff campaign. A 50% tariff on Indian imports—targeting Russian crude flows—and threats of additional levies on Japanese goods and potentially China have raised alarms over global trade fragmentation. India, which sources over a third of its oil from Russia, has pushed back sharply, calling the measures “unfair and unjustified.” The risk of retaliatory action remains a key wildcard that could complicate global supply chains and reduce import appetite in key Asian markets.

At the same time, diplomatic overtures—particularly the Witkoff-Putin talks and a U.S. push for a Russia-Ukraine ceasefire—have tempered supply risk premiums. If progress materializes ahead of the self-imposed August 8 deadline, some sanctions may be eased, potentially boosting Russian exports and weighing on prices further. OPEC+ has restored over 4 million bpd since June, and the U.S. has reported modest inventory drawdowns, offering some support—but not enough to offset bearish demand signals.

Macro headwinds remain a growing concern. Comments from Fed officials, including Kashkari’s acknowledgment of a slowing U.S. economy, have cast a shadow over global energy demand. Simultaneously, the broader dollar decline—driven by rate cut expectations and political pressure on the Fed—has failed to meaningfully lift crude, underscoring just how fragile sentiment is.

Heading into the week’s close, crude markets are likely to remain highly sensitive to both diplomatic developments and further clarity on U.S. trade actions. A breakdown below key levels could reinforce bearish momentum, particularly if demand destruction accelerates in Asia and geopolitical risks ease.

Technical Analysis

USOIL, H4

WTI Crude Oil (USOIL) is trading near $64.95 struggling to regain bullish traction after a failed breakout attempt above the $66.66 resistance level. Price action continues to respect a broader consolidation range, with key support holding firm around the $62.70 level. Notably, the recent formation of three rounded bottoms within this demand zone suggests buyers are defending the area, although conviction remains limited as price remains capped below the cluster of moving averages.

Momentum indicators remain mixed. The Relative Strength Index (RSI) has rebounded modestly from oversold territory, last seen at 38, but remains below the 50-neutral line, indicating weak bullish momentum. Meanwhile, the MACD continues to hover in negative territory, though a narrowing histogram suggests bearish pressure may be fading. Volume has picked up slightly on the recent bounce from support, lending minor credibility to the base-building narrative but not enough to confirm a reversal.

For now, the technical outlook remains neutral to slightly bearish. Until a breakout occurs on either side, USOIL is expected to remain rangebound, with traders eyeing reactions at the current support zone and overhead resistance cluster for directional cues.

Resistance Levels: 66.66, 68.60

Support Levels: 64.50, 62.70