Article by: ETO Markets
Recent analysis indicates that oil prices have been buoyed by a mix of bullish and bearish factors. In the US market, despite a plateau in the active oil rig count—a sign of halted expansion—the significant drawdowns in oil inventories reported by both API and EIA suggest that production is lagging behind demand, tightening the market and supporting prices. Internationally, geopolitical tensions play a critical role: uncertainty over a ceasefire in Ukraine and ongoing conflict in Gaza create nervousness among traders, while US tariffs on Venezuelan oil, already affecting Indian refineries, could further constrict supply. Conversely, OPEC’s intention to increase production, combined with warnings from Russia’s central bank about potential market flooding by US and OPEC, introduces downward pressure on prices. Moreover, upcoming manufacturing PMI data from both the US and China, which could signal stronger oil demand if favorable, are counterbalanced by US tariff policies—such as those on automobiles—that may dampen global economic activity. Overall, while demand indicators point to a potential increase in oil consumption, the supply side remains a dominant factor influencing market dynamics.
Gold prices have surged to an all-time high around $3,077–3,078 during the Asian session on Friday, buoyed by a flight to safety amid escalating global trade tensions. Uncertainty over US President Trump's reciprocal tariffs, including the recent 25% tariff on imported cars and light trucks set for April 3, has dampened investor sentiment toward riskier assets and spurred safe-haven flows into gold. Additionally, concerns that Trump's aggressive trade policies might slow economic growth are raising expectations that the Federal Reserve could resume its rate-cutting cycle, thereby weakening the US Dollar and further supporting gold’s appeal. While slightly overbought conditions have restrained new bullish bets ahead of the upcoming US Personal Consumption Expenditure (PCE) Price Index release, recent stronger-than-expected macro data and hawkish comments from Fed officials have added complexity to the outlook, leaving investors closely watching for signals that could shape the trajectory of US monetary policy and gold price dynamics.
From a technical perspective, gold's recent bullish performance near the $… psychological level indicates that the path of least resistance remains upward, supported by a steady three-month uptrend. However, the daily Relative Strength Index (RSI) is signaling overbought conditions, suggesting that traders should be cautious and perhaps wait for a period of consolidation or a modest pullback before committing to further long positions. Notably, any corrective moves have seen dip-buying activity around the $…–$… zone, which appears to help cap downside risk near the $…–$… region. Conversely, a sustained break below these levels could trigger technical selling, potentially dragging the price down past the $…–$… intermediate support and reverting back toward the $… mark—a pivotal threshold for short-term traders that, if decisively breached, could pave the way for a significant near-term decline.
During the early Asian session on Friday, West Texas Intermediate (WTI) is trading around $69.70, marking a one-month high. This upward momentum is largely attributed to the US imposition of a 25% secondary tariff on nations buying Venezuelan oil or gas, effective April 2—a move that bolsters prices, especially given that the US imported $5.6 billion worth of Venezuelan oil and gas in 2024. Additionally, a significant drop in US crude inventories, with the EIA reporting a decline of 3.341 million barrels for the week ending March 21, has further supported oil prices beyond market expectations. However, concerns linger as President Trump’s plan to impose 25% tariffs on imported cars and light trucks, set to take effect on April 2, may slow down overall oil demand, presenting a potential headwind for the market as noted by industry analyst Phil Flynn.
From a technical perspective, WTI’s price has been on an upward trajectory since the previous report, notably breaking the … resistance level—which has now transformed into a support level—bolstered by an upward trendline established since March 19. This bullish momentum suggests potential for further gains if the trendline remains intact, with prospects of breaching the … and eventually the … resistance levels. However, caution is warranted as the RSI has remained near 50, indicating that traders have yet to fully commit to pushing prices higher. Should bearish pressure emerge, the upward trendline might break, leading to a reversal where prices could fall below the … support and potentially target the … support level.
