Prices Hold Gains as Traders Balance Trade Hopes Against Supply Concerns
Oil prices are holding steady on Tuesday after a sharp rally to two-week highs in the previous session.
Monday’s gains were driven by optimism over a temporary U.S.-China tariff reduction, fueling risk-on sentiment across markets. That bullish momentum is now contending with rising OPEC+ supply expectations and resistance at key technical levels, keeping traders cautious.
Light crude futures are testing resistance near the 50-day moving average at $63.80. A breakout could open the path to the April 23 high at $64.87, with further upside toward the 200-day moving average at $67.61. On the downside, support remains firm between $60.09 and $59.68.
At 08:46 GMT, Light Crude Oil Futures are trading $61.89, down $0.06 or -0.10%.
U.S.-China Trade Truce Sparks Risk Appetite
Crude rose about 1.5% Monday after the U.S. and China agreed to suspend some tariffs for 90 days, raising hopes of a broader resolution to the trade war.
Analysts at ING described the move as a “larger-than-expected de-escalation,” which lifted equities, crude, and the dollar in tandem.
However, remarks from Fed Governor Adriana Kugler signaled that easing trade tensions could reduce the need for rate cuts—somewhat tempering crude’s demand outlook by limiting future monetary stimulus.
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Despite improved sentiment, supply fundamentals remain a concern.
OPEC output is projected to rise by 411,000 barrels per day in May, with further increases expected into June. Saudi Aramco plans to maintain June shipments to China at 48 million barrels, holding steady from May.
Elsewhere, Iraqi crude exports are expected to decline, and CPC Blend flows from the Black Sea are easing slightly. Mexico’s Pemex may cut overseas shipments as it redirects supply to domestic refineries, including the new Olmeca facility.
Refined Fuels and Outages Offer Support
JPMorgan analysts noted that even as global crude benchmarks have dropped 22% since mid-January, refining margins and product prices have remained stable.
Tighter refining capacity in the U.S. and Europe is increasing reliance on imports and making markets more vulnerable to unplanned outages.
Temporary supply disruptions like Equinor’s halt at Johan Castberg are helping support prices in the short term.
Market Outlook: Cautious Optimism with Technical Headwinds
The oil prices forecast remains cautiously constructive.
Trade optimism and strong refined fuel demand are supporting prices, but technical resistance near $63.80 and rising OPEC+ production are limiting further gains.
A decisive move through $64.87 would reinforce the bullish case. Until then, traders should expect consolidation with upside potential tied to fresh trade or supply catalysts.
More Information in our Economic Calendar.