WTI Crude Oil Dips to $77.30 as Trump’s Energy Moves Keep Markets Guessing

Crude oil prices experienced a decline on Monday as market participants weighed the potential impact of President-elect Donald Trump’s expected policy shifts. Trump’s anticipated move to ease sanctions on Russia’s energy sector in pursuit of a peace deal for Ukraine has tempered concerns over supply disruptions stemming from recent sanctions imposed by the Biden administration.

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Market Response to Trump’s Policy Agenda

The market remains cautious ahead of Trump’s inauguration, with expectations that he will roll back restrictions on U.S. liquefied natural gas (LNG) export licenses. This policy, aimed at boosting domestic economic growth, has added uncertainty to the energy sector. Analysts from ING suggest that market participants are adopting a wait-and-see approach, with some opting to reduce risk exposure given the uncertainty surrounding Trump’s executive orders.

Despite the recent rally, with both WTI and Brent crude marking four consecutive weeks of gains, analysts caution that Trump’s policy decisions could reverse these gains. Sanctions on Russian tankers and producers had previously tightened supply, forcing major buyers like China and India to secure shipments through alternative channels. However, Trump’s commitment to resolving the Russia-Ukraine conflict swiftly may lead to relaxed restrictions, potentially increasing supply and weighing on prices.

Technical Outlook for WTI Crude Oil

WTI crude oil is currently trading at $77.30, reflecting a modest increase of 0.03%, with prices consolidating around key levels. The 50-day Exponential Moving Average (EMA) at $77.84 acts as a critical level, suggesting market indecision. Resistance levels to watch include $79.27, $80.58, and $81.82, while support lies at $77.14, with deeper levels at $75.61 and $74.29. A decisive break above resistance could open the path to further gains, while a breach below support may signal a deeper correction.

Geopolitical and Weather-Related Factors

While geopolitical developments continue to influence sentiment, the easing of tensions in the Middle East has contributed to limiting price volatility. The recent ceasefire agreement between Israel and Hamas has reduced fears of a prolonged disruption in regional energy supplies.

WTI Crude Oil Price Chart - Source: Tradingview
WTI Crude Oil Price Chart – Source: Tradingview

Additionally, investors are closely monitoring the impact of extreme cold weather in Texas and New Mexico, which could hinder production and provide temporary upward pressure on prices.

Key Insights:

  • Crude oil consolidates near the 50-day EMA at $77.84, with key resistance at $79.27.
  • Trump’s expected policy changes introduce uncertainty, weighing on bullish momentum.
  • Cold weather in the U.S. could impact production, offering near-term support to prices.

In the coming days, market participants should closely watch for further updates on U.S. energy policies and geopolitical developments, which will be crucial in shaping the outlook for crude oil prices.

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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