Crude oil trading reminder: supply-side concerns support oil prices, which are expected to continue to rise after a short-term setback

Crude oil price volatility was limited on Friday as the market digested the impact of a new round of US tariffs on the global economy and oil demand growth. Brent crude rose 4 cents, or 0.06 per cent, to $71.74 a barrel, while US WTI rose 1 cent, little changed, to $69.27.

Despite little change during the day, oil prices still recorded significant gains this week: Brent crude rose 4.9% and WTI rose 6.4%. The rally was mainly driven by the US government's threat earlier this week to impose secondary sanctions on countries that buy Russian crude, particularly in Asia, sparking concerns about supply disruptions.

However, markets were more focused on Friday on the Trump administration's new executive order imposing tariffs of 10 to 41 per cent on a number of trading partners, including Canada and India, which will take effect on August 1.

"A new round of tariffs, if fully implemented, could push up import prices, which in turn would weigh on consumer spending and industrial activity, putting pressure on oil demand," said one market research analyst.

In fact, there is already a tentative response to US inflation, which rose in June as tariffs pushed up the price of imported goods such as furniture and entertainment, fuelling expectations that the Fed might delay cutting interest rates in the second half of the year.

Maintaining high interest rates will limit borrowing and investment, further slowing economic growth, which will also put downward pressure on the oil market.

Meanwhile, Mr. Trump's criticism of Asian countries continuing to buy Russian oil has played a role in supporting prices amid fears that seaborne oil exports of 2.75 million barrels a day could be hit if secondary sanctions were imposed.

"The Trump administration, like its predecessors, may find sanctions against the world's second-largest oil exporter extremely unlikely, or prices could surge," JPMorgan said in a report on Thursday, according to market research.

From a technical perspective, the daily chart of WTI crude oil in the United States shows that the price is still in an upward channel, but the momentum has weakened. The price has remained above the 50-day moving average for many consecutive days, and the short-term support is located near $68.50, which is also the upper edge of the previous finishing platform.

If it falls below this level, it could trigger a pullback to the $66.80 area. The initial resistance above is at $70.50, and if it can be effectively broken, it is expected to challenge the high of the year at $72.20.

In terms of technical indicators, the MACD red column shortened, indicating that the bulls' momentum was weakening, while the RSI was located in the upper neutral area, indicating that the market sentiment was more cautious. Overall, the price may remain range-bound in the short term, waiting for the fundamentals to drive the direction to choose.

Editorial opinion:

Uncertainty in global trade sentiment could provide price support in the short term, especially when it comes to energy geopolitics. However, overuse of policy will exacerbate global market uncertainty and could backfire on demand-side growth momentum.

The current oil market is not facing the impetus of a single variable, but a complex game brought about by multiple macro risks and policy intersections. Future volatility is expected to rise.