Is crude oil resuming its downtrend after a failed advance on Monday?
Crude oil closed 0.05% higher on Monday, but is trading 0.9% lower this morning as tariff uncertainty returns to markets. Despite last week's rebound from Wednesday's new long-term low of $56.06, the rally stalled above the $60 level. This price action suggests we're still witnessing just an upward correction rather than the start of a new uptrend, as the market remains below the broken medium-term support of $65-66.
For oil markets specifically, these developments are bearish:
- The Trump administration has announced investigations into imports of pharmaceuticals and semiconductors, weighing on market sentiment despite some earlier tariff exemptions.
- Concerns about global growth implications from trade tensions continue to pressure oil prices.
- Markets remain highly sensitive to news, with oil trading largely following broader market sentiment.
Oil Price Struggling After a Rebound
The daily chart of crude oil futures continues to show technical weakness following the recent breakdown. While prices have rebounded from last week's lows, they remain well below the key broken $65-66 support levels, which now act as significant resistance. The stalled rally above $60 suggests selling pressure remains at higher levels.
Weekly Chart: Uncertainty Following Rebound
On the weekly chart, the bearish breakdown pattern remains intact despite the rebound. The market's inability to reclaim key support levels suggests further downside potential in the coming weeks, though short-term bounces within this larger downtrend should be expected.
Conclusion
Crude oil is facing renewed pressure this morning as tariff uncertainty returns, erasing Monday's modest gains. The technical picture remains bearish after the decisive breakdown below the important support level of $65-66 earlier this month.
The ongoing investigations into potential new tariffs create significant uncertainty for global economic growth and, by extension, oil demand. FOMC’s Christopher Waller has noted that while the inflationary impact of duties may be transitory, trade taxes represent "one of the biggest shocks to affect the U.S. economy in many decades."
For now, my short-term outlook is neutral.
I think that no positions are justified from the risk/reward point of view.
Here’s the breakdown:
- Crude oil closed 0.05% higher on Monday but is down 0.9% in early Tuesday trading.
- The medium-term outlook appears bearish following the technical damage, despite the short-term bounce.
- In my opinion, the short-term outlook is neutral, and no speculative positions are justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
The full version of today’s analysis - today’s Oil Trading Alert - is bigger than what you read above, and it includes the current Crude Oil futures contract position. I encourage you to subscribe and read the details today (with a single-time 7-day free trial). Oil Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Stock Trading Alerts.
And if you’re not yet on our free mailing list, I strongly encourage you to join it - you’ll stay up-to-date with our free analyses that will still put you ahead of 99% of investors that don’t have access to this information. Join our free oil newsletter today.
Thank you.
Paul Rejczak,
Stock Trading Strategist