Supply Risks and Trump Tariff Court Ruling Fuel Bullish Crude Oil Outlook
2025-05-29 20:12:17
Crude oil futures rose sharply during the European session on Thursday (May 29), and if the rally continues above key resistance levels, prices are likely to break through. The recent technical focus is on the $62.60 and nearby $62.74 pivot points.
A strong breakout above these levels on high volume could lead to a test of the recent highs of $64.19 and $64.40, with $66.73 looming. Traders are closely watching volume to confirm a breakout, as a weak push could lead to a failed breakout and subsequent selling.
Trump tariff ruling temporarily eases demand concerns
A U.S. trade court blocked most of former President Donald Trump’s tariffs, a ruling that provided a boost to risk appetite in stock and commodity markets and helped propel oil prices higher. The court ruled that Trump exceeded his authority by imposing sweeping tariffs that had dampened global trade and oil demand.
Analysts warned that the ruling could face appeals, but for now the move removes a short-term demand headwind. Bjarne Scherzrop of SEB said the ruling made “the global economy work better and faster,” potentially supporting oil demand.
OPEC+ eyes July output increase, supply risks rise
Attention now turns to the upcoming OPEC+ meeting, where the group could decide to accelerate supply growth. Analysts at ING expect an additional 411,000 bpd of production in July, with similar growth expected in the third quarter.
However, supply-side pressures are also increasing elsewhere. Chevron suspended production in Venezuela after its license in the United States was revoked, reducing output by 290,000 barrels per day, more than a third of Venezuela's total exports. Meanwhile, production disruptions caused by wildfires in Alberta have added more upside risks to the supply situation.
US considers new measures, Russian crude oil sanctions attract attention
Traders are also watching the possibility of new U.S. sanctions on Russian oil, which could further tighten global supply. The geopolitical environment remains fragile and any escalation could cause oil prices to spike. Meanwhile, the market is awaiting the latest U.S. inventory data.
Preliminary data from the American Petroleum Institute showed crude and gasoline inventories fell last week, while distillate stocks rose slightly. The U.S. Energy Information Administration (EIA) is expected to confirm a 300,000-barrel increase in crude inventories later on Thursday.
Crude oil market outlook: Supply risks and technical dynamics strengthen bullish bias
(WTI crude oil daily chart source: Yihuitong)
The crude oil market is trending bullish on the back of strong technical momentum, easing trade tensions and growing supply risks, from the situation in Venezuela to possible sanctions on Russia and wildfires in Canada.
If volume can support a sustained move above the $62.74 level, then oil prices could move towards the $64.40-66.73 range. Further confirmation from OPEC+ and inventory data from the US could extend the rally.
Traders should prepare for increased volatility, but near-term market sentiment favors higher oil prices.
At 20:02 Beijing time, WTI crude oil was quoted at US$62.11 per barrel, up 0.44%.
A strong breakout above these levels on high volume could lead to a test of the recent highs of $64.19 and $64.40, with $66.73 looming. Traders are closely watching volume to confirm a breakout, as a weak push could lead to a failed breakout and subsequent selling.
Trump tariff ruling temporarily eases demand concerns
A U.S. trade court blocked most of former President Donald Trump’s tariffs, a ruling that provided a boost to risk appetite in stock and commodity markets and helped propel oil prices higher. The court ruled that Trump exceeded his authority by imposing sweeping tariffs that had dampened global trade and oil demand.
Analysts warned that the ruling could face appeals, but for now the move removes a short-term demand headwind. Bjarne Scherzrop of SEB said the ruling made “the global economy work better and faster,” potentially supporting oil demand.
OPEC+ eyes July output increase, supply risks rise
Attention now turns to the upcoming OPEC+ meeting, where the group could decide to accelerate supply growth. Analysts at ING expect an additional 411,000 bpd of production in July, with similar growth expected in the third quarter.
However, supply-side pressures are also increasing elsewhere. Chevron suspended production in Venezuela after its license in the United States was revoked, reducing output by 290,000 barrels per day, more than a third of Venezuela's total exports. Meanwhile, production disruptions caused by wildfires in Alberta have added more upside risks to the supply situation.
US considers new measures, Russian crude oil sanctions attract attention
Traders are also watching the possibility of new U.S. sanctions on Russian oil, which could further tighten global supply. The geopolitical environment remains fragile and any escalation could cause oil prices to spike. Meanwhile, the market is awaiting the latest U.S. inventory data.
Preliminary data from the American Petroleum Institute showed crude and gasoline inventories fell last week, while distillate stocks rose slightly. The U.S. Energy Information Administration (EIA) is expected to confirm a 300,000-barrel increase in crude inventories later on Thursday.
Crude oil market outlook: Supply risks and technical dynamics strengthen bullish bias
(WTI crude oil daily chart source: Yihuitong)
The crude oil market is trending bullish on the back of strong technical momentum, easing trade tensions and growing supply risks, from the situation in Venezuela to possible sanctions on Russia and wildfires in Canada.
If volume can support a sustained move above the $62.74 level, then oil prices could move towards the $64.40-66.73 range. Further confirmation from OPEC+ and inventory data from the US could extend the rally.
Traders should prepare for increased volatility, but near-term market sentiment favors higher oil prices.
At 20:02 Beijing time, WTI crude oil was quoted at US$62.11 per barrel, up 0.44%.
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