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Geopolitical Uncertainty Keeps Traders on Edge
Oil prices rebounded by 1% on Friday, closing the week nearly unchanged as traders weighed the uncertain prospects of a Ukraine ceasefire. Russian President Vladimir Putin indicated support for a U.S.-proposed ceasefire but raised conditions that delay any resolution. The prolonged war continues to keep Russian oil supplies under sanctions, adding to market volatility.
Former U.S. President Donald Trump reiterated calls for a ceasefire, highlighting the geopolitical risks that traders must navigate. Meanwhile, Chinese state firms are scaling back Russian oil imports due to sanctions risks, signaling potential supply disruptions in Asia’s largest crude market.
Supply and Demand Fundamentals Remain Bearish
Despite short-term upside movements, the long-term and intermediate trends remain bearish, with WTI trading below both the 50-day moving average ($71.68) and the 200-day moving average ($70.36). This technical positioning suggests that the market has not yet broken out of its downtrend.
Adding to the bearish case, the International Energy Agency (IEA) warned that global oil supply is expected to outpace demand by 600,000 barrels per day this year, largely due to increasing U.S. production and weaker-than-expected demand growth. Additionally, OPEC+ supply levels remain steady, reducing the likelihood of a supply-driven price surge.
Will Oil Prices Sustain a Recovery?
With macroeconomic uncertainty and rising U.S. supply, traders should remain cautious about expecting a prolonged price recovery. While geopolitical risks may drive short-term price spikes, weak demand fundamentals and increasing oil output weigh on the market’s long-term direction.
For now, crude oil has found a value zone that could trigger short-covering, but a true reversal requires a sustained break above key resistance levels. The market outlook remains neutral to bearish, with downside risks outweighing bullish momentum unless supply disruptions materialize.
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