Oil Price Fundamental Daily Forecast – Rangebound as Traders Assess Tariff Impact

U.S. West Texas Intermediate and international-Benchmark Brent crude oil futures are trading nearly flat early Friday after closing lower for a third consecutive session.

At 0740 GMT, April WTI crude oil is trading $60.88, down $0.10 or -0.16% and May Brent crude oil is at $63.82, down $0.01 or -0.02%.

Crude oil is set to close about 4 percent lower this week, its first weekly loss since the week-ending February 9. Most of the downside pressure is being attributed to a rise in U.S. crude oil stocks even as refineries hiked output, increasing by 3 million barrels, compared with an estimate of 2.1 million barrels.

Additionally, U.S. crude output fell in the last month of 2017, but in November hit an all-time high of 10.057 million barrels per day (bpd). Weekly data showed another record and further gains are expected.

Forecast

Crude oil is trading mixed early Friday and inside yesterday’s range because of trader indecision due to a surprise event. However, once clarified, we’re likely to see renewed volatility.

President Trump surprised traders by announcing he would impose hefty tariffs on steel and aluminum to protect U.S. producers. The move triggered a break in the U.S. Dollar, which had hit a six-week high against a basket of currencies earlier in the session. Traders sold the dollar on raised fears of a trade war.

U.S. stock indexes also sold off on the news. Crude could feel pressure on Friday if stocks continue their sharp retreat from recent highs. A recovery in the U.S. Dollar could also drive crude oil prices lower.

A weaker dollar is likely to underpin crude oil, but gains could be limited if stocks fall.

We could see an inside move today if traders remain confused about how to play the crude oil market due to uncertainty over the impact of the tariffs. Since Canada, Europe and Asia were caught off-guard by the announcement, we aren’t sure how they are going to respond yet. Oil traders may not want to take a position until they are sure about retaliatory measures.