WTI Crude Oil (CL=F) Falls to 12-Week Lows – Is More Downside Ahead?
WTI crude oil (CL=F) has taken a significant hit, closing at $68.37 per barrel, marking a sharp 2% decline and its lowest settlement since early December. Brent crude (BZ=F) mirrored this movement, dropping to $71.62 per barrel as market sentiment turned bearish following key developments from OPEC+, US tariff concerns, and global economic uncertainty. With oil prices sinking, investors are questioning whether this is just a temporary pullback or the beginning of a deeper slide.
OPEC+ Moves Ahead With Output Hike – Will It Weigh on Prices?
OPEC+ has officially decided to proceed with its planned April production increase, maintaining its gradual reversal of previous output cuts. Since 2022, the oil cartel has been strategically reducing supply to balance the market, with total cuts reaching 5.85 million barrels per day (bpd), approximately 5.7% of global production. However, the decision to boost supply despite weak demand projections has created downward pressure on crude prices.
Russia, a key OPEC+ member and the third-largest oil producer globally, continues to navigate Western sanctions that have complicated its crude exports. The Biden administration’s latest wave of sanctions targeted dozens of Russian oil tankers, limiting their access to global buyers. While China remains a major destination for Russian crude, India has started avoiding sanctioned shipments, further tightening Moscow’s export flexibility.
Additionally, China’s recent economic data showed some signs of stability, with the country’s February Purchasing Managers’ Index (PMI) rising to 50.2—its highest in three months—indicating modest expansion. However, concerns about China’s long-term demand remain, as its struggling property sector continues to cast a shadow over growth. If Chinese demand remains weak, even OPEC+’s supply management may not be enough to prevent further declines in crude prices.
US Tariff Threats and Economic Slowdown – Will Demand Suffer?
A significant wildcard impacting crude oil is US trade policy. President Donald Trump has reiterated his plan to impose 25% tariffs on imports from Canada and Mexico, with an additional 10% tariff specifically targeting Canadian energy products. Given that Canada supplies nearly two-thirds of US oil imports, this move could disrupt supply chains and lead to retaliatory actions from Canada.
Furthermore, Trump has threatened additional 10% tariffs on Chinese imports, exacerbating fears of a global trade war. China has already announced potential countermeasures, specifically targeting US agricultural exports. These trade disputes could negatively impact global economic activity, curbing industrial demand for oil.
Adding to the pressure, the Atlanta Federal Reserve’s GDPNow model has slashed its Q1 2025 growth forecast to -2.8%, a significant drop from -1.6% just a few days earlier. With the Federal Reserve still signaling a cautious stance on rate cuts, fears of prolonged economic stagnation are growing. If the US economy continues to slow, it will have a direct negative impact on energy demand, making it harder for crude oil to sustain a meaningful recovery.
WTI Crude Oil Technical Analysis – Where Are the Key Levels?
The technical picture for WTI crude (CL=F) is showing clear bearish signals. The recent breakdown below the $70 mark opens the door for a potential test of $65 in the near term. The 50-day moving average, which previously acted as support, has been breached, adding further confirmation of the downward momentum.
Momentum indicators such as the Relative Strength Index (RSI) have dropped below 40, signaling bearish momentum but not yet reaching extreme oversold levels. The Moving Average Convergence Divergence (MACD) histogram is also trending lower, reinforcing the downside bias.
Resistance sits at $70, a level that previously provided strong support. If WTI crude fails to reclaim this level, the next key support zone is at $65, followed by a deeper target of $62.50. Conversely, if crude oil manages to stage a rebound above $70, the next resistance area would be around $73.50, which coincides with the 200-day moving average.
Global Supply Disruptions – Will They Offset the Bearish Pressure?
While the overall outlook for oil remains bearish, there are still supply-side risks that could trigger a price recovery. The recent Ukrainian drone attack on a Russian refinery has raised concerns about fuel supply stability. Additionally, ongoing delays in Russian oil shipments due to US sanctions have contributed to longer-than-expected transit times, disrupting the usual supply chain flows.
Moreover, discussions between Iraq and Turkey over reopening the Iraq-Turkey Pipeline (ITP) are being closely watched. If the pipeline resumes full operations, it could add nearly 400,000 bpd of oil to the market, which may further suppress prices. However, political tensions between Baghdad and the Kurdistan Regional Government could delay a resolution.
Final Verdict – Is WTI Crude Oil a Buy, Sell, or Hold?
At the moment, the risk-reward setup for WTI crude oil (CL=F) leans bearish. With OPEC+ increasing supply, US tariffs threatening economic growth, and weak demand projections from China, the near-term outlook remains pressured. Traders should watch for any bullish catalysts, such as unexpected production cuts or geopolitical tensions escalating further.
For now, oil remains in a sell-the-rally mode, with resistance at $70 and further downside likely toward $65. However, any signs of stronger economic data or unexpected supply disruptions could shift sentiment quickly. Until then, caution remains warranted as crude oil prices navigate a highly uncertain macroeconomic landscape.
