Oil Price Forecast: China Demand Strength and Trump Tariffs Add Volatility

Oil prices increased after good economic growth data from China. This data improved the outlook for demand. China’s GDP reached targets and refinery activity reached record levels that indicate stable consumption.

The chart below shows that the China’s GDP grew 1.2% in Q4 2025 and beat market expectations of 1%. These numbers log the fastest expansion in past three quarters. This data reflected sustained policy support from Beijing with efforts to curb excess industrial capacity.

At the same time, President Trump’s threats of tariffs on eight European countries brought geopolitical tension. His remarks on taking control of Venezuela’s oil industry and advocating talks with Greenland caused further uncertainty in the markets. Traders responded by transferring money into oil and away from the dollar.

The weak U.S. dollar also aided crude prices. A declining dollar makes oil cheaper for other countries. With China purchasing more Russian and Venezuelan crude at discounts and Europe preparing to react to Trump’s moves, volatility in the markets is likely to be high.

Oil Technical Analysis

The WTI oil (CL) prices dropped back after hitting 200-day SMA and consolidated within the long-term support region. The price is consolidating above the 50-day SMA as shown in the chart below. It is observed that the overall picture still remains bearish as long as the price remains below $62. A break above $62 will indicate further upside towards $66. However, a break below $55 will indicate further drop in the oil market.

The correction from the $62 resistance has brought the price towards the strong support at $59, which is marked by the red descending trend line. A break below $59 will indicate further downside towards the $55 area. However, a break above $62 will indicate further upside towards the $65.50 level. As long as the price remains below the $62 area, the possibility of a downside trend is likely to remain.

Natural Gas Technical Analysis

The daily chart for natural gas (NG) shows that price is consolidating below the 200-day SMA. The price rebounded from $3 support back toward 200-day SMA and hit $3.70 area after the increase in geopolitical tensions. A break below the $3 area will push natural gas prices further lower. However, a strong recovery above the $4.50 resistance will indicate further upside toward the $5 area. Natural gas prices are consolidating within a broad range. The overall picture remains bullish.

The short-term outlook for natural gas remains uncertain as price consolidates between $3 and $5. As long as the price remains above $2.60, the possibility of natural gas is likely to remain in a positive trend. A break above $4.70 will indicate further upside in natural gas prices.

US Dollar Technical Analysis

The daily chart for the US Dollar Index shows that the index is consolidating below the 100.50 resistance area. The US Dollar Index dropped after the new tariffs were introduced by President Trump. Despite the breakout from the 200 SMA, the US Dollar Index remains bearish. A break below 97.50 will indicate further downside towards 96.50 level. However, a break below 96.50 will indicate a strong drop. A recovery above 100.50 indicates that the US Dollar Index will likely move towards the 102 level.

The 4-hour chart for the US Dollar Index shows strong consolidation between the 96.50 and 100.50 levels. As long as the index remains within this range, the next direction is likely to remain uncertain. A break above 100.50 will take the index towards the 102 level. However, a break below 96.50 will be a negative sign and may introduce further downside.

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