Crude Oil prices are plunging once again, with the potential to close below $71.00 for the week. Traders are navigating the implications of Donald Trump’s victory and renewed concerns about Chinese demand. The US Dollar Index has found some stability after comments from Fed Chairman Jerome Powell, reassuring markets about his commitment to finishing his term. This has led to some upward movement in the US Dollar as the trading session progresses.
In the US trading session on Friday, Crude Oil has experienced a more than 1% drop but remains within a narrow trading range seen over the past four days. The initial market excitement following Trump’s win seems to be waning as attention shifts towards China and the potential impact of increased US tariffs on economic growth. This could further dampen the already weak demand for Oil, potentially resulting in even lower demand forecasts for 2025. Currently, Crude Oil is trading around $70.80, with Brent Crude at $74.31.
The US Dollar Index (DXY) has received a boost following Chairman Powell’s comments and the recent Fed rate cut. Investors have reacted positively to Powell’s assurance that he will complete his term, easing uncertainties surrounding his future after Trump’s win. This has contributed to a slight uptick in the US Dollar as market participants digest the news.
Oil news and market movements indicate that the initial market rally following Trump’s victory is slowing down as concerns about China take center stage. Oil supply data from OPEC shows an increase in production, largely driven by a recovery in Libyan output after the resolution of a political crisis. Furthermore, Tropical Storm Rafael is expected to hit the Texas and Louisiana coasts, potentially impacting Oil production in the region. Additionally, the weekly Baker Hughes US Oil rig count is due, with previous data showing 479 rigs.
In terms of technical analysis, Crude Oil prices continue to face downward pressure, with fears of lower demand from China due to potential US tariffs. The $74.11 level presents a significant hurdle for Oil prices, with key moving averages acting as resistance levels. However, the 55-day SMA at $70.81 remains a critical support level, with further downside potential towards $67.12 and below in case of a breakdown. Traders are closely monitoring geopolitical tensions and supply-demand dynamics to gauge future price movements.
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