What’s next for crude oil prices after tariff news and today’s sell-off?
Crude oil closed 0.72% higher on Wednesday, continuing what appeared to be a strengthening uptrend after breaking above the key $70 resistance level earlier this week. However, today's dramatic 6.8% plunge in reaction to the tariff news has completely invalidated this bullish setup.
The sharp reversal has pushed prices below the critical $70 support level, with WTI crude now trading around $68.6. This represents a decisive breakdown that likely signals further weakness ahead. Key support levels to watch now include $65-66 area.
For oil markets specifically, these developments are decidedly bearish:
- Potential economic slowdown or recession would significantly reduce oil demand
- Trade barriers may disrupt global supply chains and energy flows
- Retaliatory measures from affected countries could further dampen economic activity
However, oversold conditions may trigger a technical bounce in the near term.
Oil Price Daily Chart – Failed Rebound
Quoting last Wednesday’s analysis, “The daily chart of crude oil futures is still showing a clear downtrend that began with the January 15 local high of $79.39. However, the decline appears to be pausing near last September lows, which could be a positive sign for oil bulls.”
Conclusion
Crude oil's technical picture has deteriorated significantly following Trump’s tariff announcement. The break below $70 invalidates the previous short-term uptrend and opens the door to further declines toward the support of $65-66.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil has retraced its recent advance in a sharp move lower.
- The market may pause near the important support level of $65-66.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist