Oil Steadies After Steep Declines Push Prices Into Oversold Zone
Oil edged higher after a tumultuous few sessions that saw prices plunge to a three-year low, as traders continue to digest President Trump’s sweeping tariffs on major US trading partners and OPEC+’s unexpected production hike.
Brent rose toward $70 a barrel after losing more than 6% over the prior four sessions, while West Texas Intermediate was near $67. Trump is delaying some levies on automakers and considering exemptions for certain agriculture products, but still moving forward with reciprocal tariffs on April 2.
Futures have tumbled since mid-January as Trump’s trade policies rattle global markets and America’s neighbors ready countermeasures. OPEC+ has also signaled plans to start reviving idled production in April, adding to the bearish headwinds given traders hadn’t expected the hike.
Wednesday’s selling pressure was bolstered by flows from CTAs, although those volumes have been largely expected based on recent price moves, said Nicky Ferguson, head of quantitative research at Energy Aspects. Such traders should reach their maximum short positions in the coming days, he added.
Those flows helped push Brent futures into oversold territory for the first time since September based on one technical gauge. The term implies the recent lurch lower has been excessive.
“Technically, it is now oversold and Brent crude easily take some time to the upside,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. In recent days oil has been “selling off as OPEC+ has changed its strategy and priorities, but surplus hasn’t fully arrived quite yet.”
US Gulf Coast refineries are placing fewer orders for crude from Mexico, which is planning to announce its response to Trump’s tariffs on Sunday. The Canadian province of Alberta will work on building pipelines to the coast to increase oil shipments to Asia and Europe, according to its premier.
Some market watchers are starting to rethink their price forecasts.
Morgan Stanley trimmed its Brent estimates through the rest of the year, and expects the benchmark to trade in the $60s during the second half.
Brent for May delivery rose 0.2% to $69.41 a barrel at 10:54 a.m. in London. WTI for April delivery was 0.2% higher at $66.43 a barrel.
Source : Bloomberg
