Crude Oil Week Ahead: Are Upside Hedging Risks Fading?
Crude Oil Week Ahead: with crude oil markets tripping on rising inventories, overproduction risks from the US, and declining supply disruption risks from Russia-Ukraine tensions, is oil on track to new 4-year lows in 2025?
Share this:
Key Events:
- Oil tests the psychological $70-barrier
- Flash Manufacturing and Services PMIs (UK, EU, and US)
- Crude Oil Week Ahead Technical Analysis: 3-Day Time Frame
Market Overview
With peace talks between Russia and Ukraine emerging in headlines, crude oil continues to fluctuate amid rising supply and declining tariff risks. The extended negotiation period has eased concerns over immediate trade disruptions, keeping oil aligned with its bearish momentum – a trend in place since September 2022 highs and extending into 2025. However, uncertainty remains over Middle Eastern tensions and the Gaza strip.
Bearish Pressures on Oil Prices
The latest US CPI data surged to multi-month highs, reinforcing expectations of a prolonged tight monetary policy. Meanwhile, crude oil inventories rose to one-year highs at 8.7M barrels, and dropped to another elevated supply level at 4.1M barrels last week, aligning with October 2024 highs – a key factor adding to bearish sentiment. The short-lived upside momentum from hedging risks appears to be fading as negotiations progress and tariff risks are postponed.
Key Events to Watch
FOMC Member Policy Outlooks: The stance on economic policies in light of elevated inflation could influence oil demand potential.
Trump Policy Announcements: Potential policies affecting the energy sector – especially under the ‘Drill, Baby, Drill’ agenda – may trigger short lived price spikes, as increased supply risks remain core focus.
Flash PMIs on Friday: Flash Manufacturing and Services PMI data across the Eurozone, UK, and US could impact oil demand expectations and price volatility.
Technical Analysis: Quantifying Uncertainties
Crude Oil: 3-Day Time Frame – Log Scale
Source: Tradingview
The latest price action on crude oil reflects dominance for bearish sentiment, with a large bodied bearish candle engulfing the week’s gains. Prices have dropped below the critical 72 level once again, touching the $70.07 low. Crude oil is now facing the trendline connecting consecutive lower highs from November 2024 to December 2024, within the 70-69.50 range.
A firm break below this zone could further reinforce the bearish trend, aligning crude oil with its longer-term downtrend towards the key 4-year support zone between $66 and $64. A confirmed breakdown below this level could open the door for new 4-year lows in 2025, eyeing $60, $55, and, in extreme cases, $49.
Upside potential: given that crude oil is trading near a critical support zone, a potential rebound could lead to resistance levels at $73.50, $75, and $78. A decisive close above $78, breaking the two-year downtrend, could signal a bullish reversal, paving the way for rallies toward $82, $86, and $90.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
You Tube: Commodities and Forex Trading with Razan Hilal, CMT
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Oil Quietly Hands the Fed a Reason to Stay Hawkish
Oil prices and the U.S. dollar are both on the front foot as elevated energy costs feed Fed warnings that inflation may prove sticky.
Wall Street Forecast: DJIA falls as treasury yields hit new highs and ahead of the Trump-Xi summit
U.S. stocks are falling, further extending losses from the previous session, as oil prices move higher alongside Treasury yields and caution reigns ahead of the summit between President Trump and Xi Jinping.
Oil, USD/JPY Forecast: Two trades to watch
Oil recovers above $90 amid a lack of progress in US-Iran diplomacy. USD/JPY rises to 158 on widening Fed-BoJ policy outlook.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.