WTI finds support at $75 as markets assess the impact of Trump policies

U.S. crude oil prices (WTI) are attempting to stabilize on Wednesday after finding support at the 200-day Simple Moving Average (SMA) at $75 per barrel. Recent momentum has been skewed to the downside, exacerbated by policy uncertainties during Trump’s initial days in office. This decline follows a pullback from previously overextended bullish momentum, which saw the Relative Strength Index (RSI) venture into overbought territory after months of sideways consolidation around $70. The longer-term outlook remains bullish, provided the pullback doesn’t deepen towards $72 per barrel, a level that could reignite concerns of extended consolidation.

US crude (WTI) daily chart

Past performance is not a reliable indicator of future results.

Fundamentally, Trump’s sweeping policies to maximize U.S. oil and gas production pose potential challenges for oil prices, as increased domestic supply may weigh on the market. However, despite President Joe Biden’s efforts to transition away from fossil fuels, U.S. producers have continued drilling at record levels, capitalizing on elevated prices following sanctions on Russian exports. This activity suggests that spare production capacity may be limited, offering a degree of support to oil prices.

Oil markets could face further downside pressure due to an oversupply scenario amid weakening demand expectations. Additionally, the potential resolution of shipping disruptions in the Red Sea, contingent on the successful implementation of a Gaza ceasefire, could also exert downward pressure on prices.

On the other hand, anticipated tariffs of 25% on Canadian imports are likely providing a cushion for oil prices. As Canada exports most of its crude to the United States, often at a discounted rate, these tariffs could drive U.S. crude prices higher. For now, traders appear to be taking profits as they await further clarity on how Trump-era policies will impact the broader oil market.