Article by: ETO Markets
In the oil market, oil prices continued their downward trend over the past week despite temporary recoveries, reflecting a bearish market sentiment. The US oil market appears to be easing, as indicated by a decline in active oil rigs from 478 to 472 and rising oil inventories, with API reporting a 2.86-million-barrel increase and EIA showing an even larger 3.46-million-barrel rise. These factors suggest that oil supply is outpacing demand, reinforcing bearish pressure. However, upcoming US tariffs on oil imports from Canada and Mexico could tighten supply, potentially shifting market dynamics. Additionally, Trump's push for increased domestic drilling faces resistance due to high production costs and concerns about unprofitably low prices.
Former US President Donald Trump called on OPEC+ members at the World Economic Forum in Davos to increase oil output, aiming to lower prices and curb Russia’s war financing. However, OPEC is likely to reject this request, prioritizing revenue over market share, with a deeper production cut being a more probable scenario. Analysts anticipate further declines in oil prices, influenced by Trump’s push for lower prices, the Federal Reserve's decision to hold rates steady, and subdued manufacturing activity in the US and China. Upcoming PMI data could provide further insights into oil demand trends.
Gold (XAU/USD) consolidates near record highs below $… as investors weigh geopolitical tensions and US President Donald Trump's renewed tariff threats, which could fuel inflation and support demand for the safe-haven metal. However, a hawkish Federal Reserve stance, reinforced by its decision to hold interest rates steady, has lifted US Treasury yields and the US Dollar, capping gold's gains. The latest US GDP data showed a slowdown to 2.3% in Q4, below expectations, further driving gold demand. Meanwhile, traders remain cautious, awaiting the US PCE Price Index for further market direction.
From a technical standpoint, a sustained move above $… could signal further bullish momentum, but with the daily RSI nearing overbought territory, a near-term consolidation or pullback may be necessary before fresh upside positioning. Due to the yearly-high price $…, the strong resistance level would be on the psychological level $…. On the downside, initial support is seen at the $…-… zone, followed by $…-…. A break below these levels could trigger long-unwinding, potentially dragging gold toward $… and the critical $…-… support zone, where a decisive breach may open the door for further declines.
WTI crude oil trades around $… in the early Asian session on Friday, edging higher as traders assess the potential impact of US tariffs on Canadian and Mexican crude imports. While President Trump has threatened a 25% tariff starting Saturday, it's unclear if oil will be included. Markets are also focused on the upcoming OPEC+ meeting, where Trump is pressuring Saudi Arabia to lower prices, though tougher US sanctions on Russian oil exports could provide support for crude prices. The balance between these factors will likely shape oil price movements in the near term.
From a technical perspective, WTI crude remains in a bearish trend, continuing its decline through the Asian and early European sessions if it breaks below the $… support level. The intact downward trendline and the RSI falling below 50 indicate sustained bearish sentiment. If selling pressure persists, WTI may test the $… support and potentially drop further toward $…. A bullish reversal appears unlikely unless WTI breaks above $… and the upward trendline, with further upside targeting $… as confirmation of a shift in momentum.
