Oil Prices Drop 2% as Peace Talks & Rising U.S. Inventories Weigh on WTI
Oil prices fell sharply this week, with WTI crude dropping over 2%, as geopolitical developments and increased U.S. inventories pressured the market.
Brent and WTI crude both declined after former U.S. President Donald Trump announced that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky expressed interest in peace talks.
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Sanctions on Russian crude exports have supported higher prices for nearly three years. However, the possibility of an end to the war in Ukraine has sparked optimism that these restrictions could ease, leading to increased supply in global markets.
Adding further pressure, U.S. crude inventories surged by 4.1 million barrels, exceeding analyst expectations of a 3-million-barrel increase, according to the Energy Information Administration (EIA). A rise in inventories signals weaker demand and excess supply, both of which typically weigh on oil prices.
Market Reacts to Trump’s Trade Tariff Warnings
Oil markets also faced headwinds after Trump threatened new tariffs on trade partners, sparking concerns about economic slowdown and weaker oil demand. Trump stated he would impose reciprocal tariffs on any country that levies duties on U.S. imports, raising fears of escalating trade tensions that could curb economic growth.
Key Market Pressures:
Trump’s potential tariffs could slow economic growth and reduce oil demand.
Increased U.S. crude inventories signal weaker consumption trends.
Potential peace deal in Ukraine may lead to lifting Russian oil sanctions.
With these factors converging, oil markets remain under pressure, leaving traders cautious about the short-term demand outlook for crude.
WTI Crude Oil Price Analysis: Downtrend Remains Intact
WTI crude oil is trading at $70.68, holding within a descending channel that continues to define its bearish trend. The 50-day EMA ($72.00) has acted as a dynamic resistance level, rejecting recent upside attempts.
Resistance Levels:
$71.89 – First major barrier before trend reversal.
$72.60 – Strong resistance aligning with the 50-day EMA.
$73.63 – Key level that must be broken for bullish momentum.
Support Levels:
$70.39 – Immediate support near the midline of the descending channel.
$69.46 – Next key downside target if selling pressure persists.
$68.63 – Stronger support where buyers may step in.
A break below $70.39 could reinforce bearish sentiment, targeting $69.46. However, a move above $72.00 could challenge the downtrend, potentially driving prices toward $73.63. Traders should monitor volume trends and geopolitical updates, as both factors could trigger volatility in oil markets.
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