Oil Prices Stuck at $70.90 – Can WTI Break $71.59 or Crash to $68?
Oil markets remain under pressure as prices edge higher in Friday’s Asian trading session but are still on track for a third consecutive weekly decline.
Renewed U.S. trade tensions, coupled with swelling crude inventories and potential supply increases from major producers, continue to weigh on investor sentiment. West Texas Intermediate (WTI) crude hovers around $70.90, struggling to break key resistance levels, while broader market uncertainties limit gains.
U.S. Sanctions on Iran and Trade War Concerns
Despite a brief recovery, oil markets remain cautious following the U.S. Treasury’s announcement of new sanctions targeting Iranian crude shipments to China. The move aims to restrict Tehran’s oil exports, which currently exceed 1.5 million barrels per day (bpd). However, traders remain skeptical about the sanctions’ long-term impact, as China continues to find alternative supply routes.
Adding to market pressure, President Donald Trump’s renewed trade war rhetoric is raising concerns over global demand. While a 10% tariff on Chinese imports is set to take effect, the administration has temporarily suspended additional levies on Mexico and Canada. However, analysts warn that further escalation could weaken industrial demand and slow global economic growth.
Yeap Jun Rong, market strategist at IG, noted that “oil gains are limited, reflecting persistent concerns over demand headwinds and the potential for increased production from OPEC+ and the U.S.” The sentiment highlights traders’ fears that supply-side pressures may outweigh geopolitical risks.
U.S. Crude Inventories Surge, Weighing on Prices
Oil markets were further rattled after the U.S. Energy Information Administration (EIA) reported a larger-than-expected build in crude stockpiles. U.S. inventories rose sharply last week, as refinery maintenance curbed demand, compounding concerns about excess supply. This increase has amplified downward pressure on prices, with some analysts predicting continued volatility in the coming weeks.
BMI analysts highlighted that “tariff risks and swelling inventories are eclipsing the impact of U.S. sanctions on Iran.” Traders now look to February 9’s OPEC+ meeting for signals on potential production adjustments. Any indication of increased output could further weigh on crude prices.
Technical Outlook: WTI Crude Oil Struggles Below Resistance
WTI crude oil currently trades at $70.90, up 0.02%, showing signs of consolidation after testing support at $70.42. The broader downtrend remains intact, with price action confined within a descending channel. Immediate resistance is seen at $71.59, aligning with the 50-day EMA at $71.78. A breakout above this level could push prices toward $72.91, with further upside capped at $73.83.
On the downside, $70.42 serves as critical short-term support, with further declines potentially exposing $69.49 and $68.47. The 50-day EMA continues to act as dynamic resistance, reinforcing the bearish bias.
With supply concerns and economic uncertainty dominating sentiment, the market remains vulnerable to further downside pressure unless crude breaches $71.78 decisively. Traders should watch for a retest of resistance at $71.59 to gauge near-term momentum shifts.
Key Insights:
WTI crude oil trades at $70.90, struggling below key resistance at $71.59.
50-day EMA at $71.78 acts as a critical resistance level.
Support at $70.42 holds; a break below could extend losses toward $69.49.
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