Crude Oil Week Ahead: Bears Dominate Weekly Close

Key Events This Week

• The EU plans to impose restrictions on dozens of vessels within Moscow’s shadow fleet of tankers.
• Ongoing negotiations and tactical developments between Russia, Ukraine, the EU, and the US. Concerns arise over the US Core PCE, in light of alarming CPI figures.
• G20 meetings in light of Trump’s tariff threats

Market Overview

The crude oil market remains under significant bearish pressure, compounded by uncertainties regarding emerging peace deals, non-OPEC supply targets, and potential risks to oil demand. While short-term fluctuations might offer brief periods of upside if negotiation tactics tighten, the prevailing downtrend—from 2022 to 2025—will persist unless a robust climb above the $78 mark materializes.

Tariff risks and rising inflation metrics are contributing to increasingly bearish oil forecasts. Economic strains from trade wars, coupled with expectations of tighter monetary policy, reinforce this outlook.

Fed Chair Powell has reiterated his confidence in the US Core PCE as a reliable measure of inflation. In light of the concerning figures released in January 2025, the next PCE report is scheduled for Friday.

Meanwhile, intensifying sanctions continue to sustain the risk of upside hedging between oil and gas, particularly due to potential export disruptions from Russia. Shadow fleets, considered unsafe backup options, are now being targeted as negotiations intensify.

Technical Analysis: Quantifying Uncertainties

Crude Oil Week Ahead: 3-Day Time Frame – Log Scale

Source: Tradingview

The 70$ barrier is challenging crude oil’s downtrend, having both the psychological support number characteristic alongside its alignment with oil sanction risks. A clean close below $70 could pave the way for further declines toward levels around $68.80, $66, and $64. Should prices breach these levels, the likelihood of a sustained downtrend increases, with potential targets of $60, $55, and even $49 in extreme scenarios.

Conversely, on the upside, price gains appear to be capped. Resistance is observed above $73, with key levels at $76 and $78 that must be surpassed before bullish sentiment can be confirmed on the chart.

Natural Gas: Weekly Time Frame – Log Scale

Source: Tradingview

For natural gas, the upside risk is may reach resistance levels at approximately 4770, 5770, and 6780, which align with the Fibonacci retracement levels of 0.382, 0.5, and 0.618 measured from the high on August 22 to the low in February 2024.

If the price doesn’t manage to surpass the 4770-mark, combined with overbought conditions on the RSI, a potential reversal toward support levels 3.680, 3, and 2.680 can be possible.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves