The crude oil price forecast remains uncertain as prices hold above $66 per barrel, driven by sanctions on Iranian and Russian oil and broader market recovery sentiment. However, ongoing trade war tensions and supply concerns continue to pose a bearish outlook for the global oil market.
Key Market Drivers
Several factors are currently shaping oil prices:
- Russia-Ukraine tensions continue to threaten a peace agreement, maintaining upward pressure on oil prices.
- US-imposed sanctions on Iran’s oil minister and shadow fleet are further restricting supply.
- OPEC’s upcoming supply quota changes in April could affect market stability.
- Major central banks, including the Fed, BOE, BOJ, and SNB, are set to announce key monetary policy decisions that may influence market sentiment.
Trade War Risks Weigh on Market Sentiment
Despite the supportive impact of oil sanctions, the market remains vulnerable to bearish pressures. The impending unwinding of OPEC supply quotas, coupled with weak oil demand forecasts, is keeping traders on edge.
Escalating trade tensions between the US, Canada, and the Eurozone have added further uncertainty. Recent retaliatory tariffs have led to potential US-imposed tariffs of up to 50% on Canadian goods and 200% on Eurozone exports. As a result, safe-haven assets like gold surged past $3,000 per ounce, reflecting heightened investor anxiety.
Central Bank Decisions and Economic Impact
With oil prices under pressure, expectations of central bank rate cuts have intensified. The Bank of Canada (BOC) recently lowered rates to their lowest level since 2022 in an attempt to stabilise economic growth. Meanwhile, the Federal Reserve, Bank of England, and Bank of Japan are expected to keep rates steady in their upcoming policy meetings. However, investors will be watching closely for any signs of further economic stimulus.
Technical Analysis: Key Price Levels to Watch
Oil prices have rebounded from their three-year lows in September 2024, reflecting a shift in market sentiment. However, key technical resistance levels must be breached before the market can shift to a more bullish outlook.
Upside Potential
- A sustained close above $68.70 could drive prices toward $69.30, $70.80, $72.70, and $74.30.
Downside Risks
- A break below $65.12 could trigger losses, with key support levels at $60 and $55.
Market Outlook: Uncertainty Ahead
The crude oil price forecast remains highly volatile amid a combination of geopolitical risks, trade disputes, and central bank policies. While supply constraints and sanctions are supporting prices in the short term, broader economic uncertainties and trade tensions continue to pose downside risks. As the market navigates these challenges, traders should prepare for heightened volatility in the weeks ahead.
