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On Tuesday, Light Crude Oil Futures settled at $66.25, up $0.22 or +0.33%.
Weaker Dollar Supports Oil, But Economic Concerns Cap Gains
Oil prices edged slightly higher on Tuesday, supported by a weakening U.S. dollar, which hit a four-month low. A weaker dollar makes crude more affordable for international buyers, offering short-term price support. However, broader economic concerns weighed on the market, limiting gains.
Equity markets remained under pressure, with U.S. stocks extending losses. The S&P 500 posted its steepest decline since December 18, while the Nasdaq tumbled 4%, its worst single-day drop since September 2022. Weakness in risk assets has kept oil traders cautious, reinforcing the fragile sentiment.
Further complicating market sentiment, U.S. President Donald Trump announced a new 25% tariff on all steel and aluminum imports from Canada, escalating trade tensions. While protectionist policies have contributed to volatility, the impact on crude demand remains uncertain. Investors are now looking ahead to U.S. inflation data due Wednesday, which could influence the Federal Reserve’s rate decisions and, in turn, oil market dynamics.
Supply-Side Pressures and OPEC+ Response
The U.S. Energy Information Administration (EIA) raised its crude production forecast, projecting output at 13.61 million barrels per day (bpd) for 2025, surpassing prior estimates. Meanwhile, crude stockpiles rose by 4.2 million barrels last week, according to industry data, adding further pressure to the market. Official government data on crude inventories will be released Wednesday, providing additional insight into supply trends.
On the OPEC+ front, the group has announced plans to increase production in April, though recent price declines have raised doubts about whether the strategy will hold. Russia’s Deputy Prime Minister Alexander Novak confirmed that the planned output increase remains in place but signaled that the group may reassess its position if prices fall further.
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