Crude oil futures are under pressure from tariffs and are at risk of falling to the $60 support level.
2025-07-31 19:39:53
Crude oil futures weakened in European trading on Thursday, with traders closely watching the $69.89 technical pivot level. Price fluctuations around this important level are key to market sentiment.
If the price can sustain above this level, it may start a rally targeting the resistance levels near $77.09 and $77.64.
Trump's tariff pressure and sanctions on Russia increase uncertainty in the crude oil market
Crude oil prices came under pressure as traders assessed the potential supply consequences of former President Donald Trump's call for immediate tariffs on Russia and its trading partners. Trump pledged to impose 100% secondary tariffs unless progress was made in Ukraine talks within 10-12 days, earlier than the previously stated 50-day deadline.
Given Trump's history of erratic trade policy, analysts are cautious about fully factoring this threat into prices. Nevertheless, the risk of a reduction in Russian crude oil exports remains if these rhetoric translates into actual action. To make matters worse, the US Treasury Department imposed new sanctions on more than 115 entities linked to Iran, highlighting the tightening of government pressure on major oil-producing countries.
Crude oil inventories rose, while gasoline stocks fell, pointing to resilient demand.
U.S. crude oil inventories unexpectedly rose by 7.7 million barrels to 426.7 million barrels last week, contrary to analysts' expectations for a 1.3 million-barrel drop. The unexpected increase stemmed from a drop in exports. However, gasoline inventories fell by 2.7 million barrels, far exceeding expectations and indicating continued strength in domestic driving demand.
According to Fujitsu Securities, the data presented a mixed picture – positive for refined products but negative for crude oil. Traders viewed the overall results as broadly neutral for the crude oil market.
Fed on hold, but dissent suggests possible September shift
The Fed held interest rates steady at 4.25%-4.5%, but two board members dissented, favoring a rate cut – a rare occurrence. Fed Chairman Jerome Powell clarified that no decision had been made on the September meeting, disappointing traders who had expected a higher probability of a rate cut.
3% GDP growth and moderate inflation (2.1% headline and 2.5% core) support accommodative policy. However, Powell emphasized the need for vigilance against inflation, particularly given tariff-related risks. The probability of a September rate cut fell from 64% to 46% following the statement, and financial conditions tightened slightly.
Outlook: Cautiously bearish below $69.89, major macro risks remain
(WTI crude oil daily chart source: Yihuitong)
Crude oil's technical indecision at $69.89, coupled with rising geopolitical and policy headwinds—from Trump's tariff threats to the Federal Reserve's mixed signals—suggests a cautiously bearish short-term outlook. Unless bulls recapture and hold this pivotal level, a further drop to support in the mid-$60s is likely.
At 19:37 Beijing time, WTI crude oil was quoted at US$69.65 per barrel, down 0.50%.
If the price can sustain above this level, it may start a rally targeting the resistance levels near $77.09 and $77.64.
Trump's tariff pressure and sanctions on Russia increase uncertainty in the crude oil market
Crude oil prices came under pressure as traders assessed the potential supply consequences of former President Donald Trump's call for immediate tariffs on Russia and its trading partners. Trump pledged to impose 100% secondary tariffs unless progress was made in Ukraine talks within 10-12 days, earlier than the previously stated 50-day deadline.
Given Trump's history of erratic trade policy, analysts are cautious about fully factoring this threat into prices. Nevertheless, the risk of a reduction in Russian crude oil exports remains if these rhetoric translates into actual action. To make matters worse, the US Treasury Department imposed new sanctions on more than 115 entities linked to Iran, highlighting the tightening of government pressure on major oil-producing countries.
Crude oil inventories rose, while gasoline stocks fell, pointing to resilient demand.
U.S. crude oil inventories unexpectedly rose by 7.7 million barrels to 426.7 million barrels last week, contrary to analysts' expectations for a 1.3 million-barrel drop. The unexpected increase stemmed from a drop in exports. However, gasoline inventories fell by 2.7 million barrels, far exceeding expectations and indicating continued strength in domestic driving demand.
According to Fujitsu Securities, the data presented a mixed picture – positive for refined products but negative for crude oil. Traders viewed the overall results as broadly neutral for the crude oil market.
Fed on hold, but dissent suggests possible September shift
The Fed held interest rates steady at 4.25%-4.5%, but two board members dissented, favoring a rate cut – a rare occurrence. Fed Chairman Jerome Powell clarified that no decision had been made on the September meeting, disappointing traders who had expected a higher probability of a rate cut.
3% GDP growth and moderate inflation (2.1% headline and 2.5% core) support accommodative policy. However, Powell emphasized the need for vigilance against inflation, particularly given tariff-related risks. The probability of a September rate cut fell from 64% to 46% following the statement, and financial conditions tightened slightly.
Outlook: Cautiously bearish below $69.89, major macro risks remain
(WTI crude oil daily chart source: Yihuitong)
Crude oil's technical indecision at $69.89, coupled with rising geopolitical and policy headwinds—from Trump's tariff threats to the Federal Reserve's mixed signals—suggests a cautiously bearish short-term outlook. Unless bulls recapture and hold this pivotal level, a further drop to support in the mid-$60s is likely.
At 19:37 Beijing time, WTI crude oil was quoted at US$69.65 per barrel, down 0.50%.
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