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Oil prices are finding support from a weakening U.S. dollar, which fell 0.5% to a fresh 2025 low on Tuesday. A weaker dollar makes crude more attractive to buyers using other currencies, providing short-term upside. However, mounting concerns over a U.S. economic slowdown and ongoing trade tariff uncertainties are capping gains.
According to Daniel Hynes, senior commodity strategist at ANZ, oil’s resilience despite a softening economic outlook indicates strong near-term demand. Meanwhile, Priyanka Sachdeva, senior market analyst at Phillip Nova, noted that while a weaker dollar offsets bearish economic signals, the effect may be temporary.
U.S. Stock Market Selloff and Trade Policy Uncertainty
Equity markets are adding to oil’s volatility, with U.S. stock prices posting their steepest declines in months. Trade protectionism remains a key concern as the U.S. has implemented, then postponed, tariffs on major oil suppliers Canada and Mexico while escalating duties on China.
President Trump’s comments over the weekend, signaling a “period of transition” and leaving the possibility of a U.S. recession open, have added further uncertainty.
Yeap Jun Rong, market strategist at IG, highlighted that oil sentiment remains fragile, with investors seeking clarity on tariffs and U.S. economic conditions. Persistent growth risks could limit upside movement in crude prices.
Rising U.S. Crude Supply and Market Outlook
On the supply side, U.S. crude oil production is expected to exceed previous forecasts, with the Energy Information Administration (EIA) now projecting a record 13.61 million barrels per day. Meanwhile, OPEC+ plans to increase production in April, adding to global supply pressures.
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