WTI Crude Oil Declines Sharply as Global Trade Tensions and Supply Concerns Mount

Market Overview

Australia

The Australian dollar slipped toward $0.63 on Friday, reversing earlier gains as escalating global trade tensions and President Trump’s shifting tariff policies fueled risk-off sentiment. Despite this, the Aussie remains on track for a 1.8% weekly gain, supported by a weaker US dollar and strong Australian GDP and trade data. RBA remains cautious, closely monitoring inflation risks before considering further rate cuts. 

Investors are now focused on the upcoming US payroll data, which could impact the AUD/USD pair. The broader market saw a sharp selloff in risk assets, with Wall Street tumbling and investors seeking safe havens like the yen and Swiss franc. Meanwhile, Australian bond yields rose alongside global rates, driven by Germany’s historic fiscal shift. Traders are also watching Chinese economic stimulus developments for further AUD/USD movement.

New Zealand

The New Zealand dollar (NZD) held steady at $0.5735 on Friday after gaining 2.4% for the week, supported by improved risk sentiment and economic stimulus measures from China. Markets are awaiting U.S. jobs data, which could impact NZD/USD. However, ANZ analysts warn that downside risks remain, with the NZD potentially falling to $0.55 by mid-year.

Additionally, the sudden resignation of  Reserve Bank of New Zealand Governor Adrian Orr has added uncertainty, while New Zealand government bond yields surged in line with global trends. Investors are also watching the impact of the U.S. temporarily postponing auto tariffs, which helped the NZD reach a one-week high earlier.

XAUUSD

Prediction: Sideways with a slight bullish bias 

Gold remains in an overall uptrend but is currently stuck in a sideways range between $2,906 - $2,929. At present, gold is trading around $2,908, after a slight 0.3% decline in early Asian session trading. The market is awaiting the Non-Farm Payrolls (NFP) report tonight to determine the next move. 

FUNDAMENTAL ANALYSIS 

Monetary Policy and Fed Impact 

Fed member Christopher Waller stated that he does not support a rate cut in this month's meeting but remains open to a cut later this year if inflation continues to cool. 

U.S. Treasury yields have dropped to their lowest level of the year due to expectations that the Fed will cut rates in the future, supporting gold prices. 

Economic Data and Inflation 

U.S. jobless claims fell more than expected, indicating a stable labor market. However, the upcoming NFP report will be crucial in determining whether the Fed adjusts its stance. 

U.S. CPI and PPI data will be released next week, which will significantly influence the Fed's monetary policy direction. 

Impact of U.S. Trade Policy 

President Trump has temporarily delayed the 25% tariff on imports from Canada and Mexico, stabilizing market sentiment. However, trade tensions remain a potential risk, which could increase gold's safe-haven appeal if uncertainties escalate. 

Market Sentiment and Physical Gold Demand 

Perth Mint reported a 35% increase in physical gold sales in February, indicating strong demand despite high prices.  China’s central bank (PBoC) continues to purchase gold, reflecting strong confidence in the precious metal. 

TECHNICAL ANALYSIS 

Key Resistance Levels 

●    $2,929: Immediate resistance; a breakout above this level could push prices to $2,956 - $2,960.
 
●    $2,956 - $2,960: Recent highs; breaking this zone could trigger a stronger bullish continuation. 

Key Support Levels 

●    $2,906 - $2,891: Crucial support area; a breakdown here could drag prices down to $2,850. 

●    $2,850: Strong support, aligning with the 200-day EMA, where significant buying interest may emerge. 

●    $2,833: Major support; if broken, it could signal a trend reversal to the downside. 

Technical Indicators: 

RSI: 54.28 (Neutral) → No overbought or oversold signals; the market remains in consolidation mode ahead of key data.  Slight decline in trading volume, indicating cautious sentiment before the NFP report  Gold is currently trading sideways with a slight bullish bias. However, significant volatility could occur after the U.S. jobs report tonight. Investors should closely monitor market reactions at key support and resistance levels. 

USOIL (WTI Crude Oil) 
 
Prediction: Decrease 

WTI crude oil continues its strong downtrend, recording its largest weekly decline since October 2024. Currently, prices are hovering around $66.49, with selling pressure still dominant. Concerns over supply and demand imbalances and global trade tensions have negatively impacted the crude oil market. 

FUNDAMENTAL ANALYSIS 

U.S. Trade Policy & Its Impact 

Tariff impact: President Donald Trump has temporarily delayed the 25% tariffs on goods from Mexico and Canada until April 2. However, Canada maintains retaliatory tariffs, while China’s new tariffs will take effect next week. These trade tensions raise concerns about global economic growth, weakening crude oil demand. 

Geopolitical impact: Russia has signaled peace negotiations with Ukraine, which could lead to sanctions easing. This may increase Russian oil exports, adding downward pressure on oil prices. 

Increasing Crude Oil Supply 

OPEC+ production boost: OPEC+ confirmed it will increase production quotas by 138,000 barrels per day (bpd) starting in April. Additionally, the potential restart of the Kirkuk-Ceyhan pipeline and higher production from Kazakhstan's Tengiz oil field will further raise supply. 

Russia ramps up exports: Russian refined oil product exports have reached their highest level in a year, at 2.5 million bpd.  U.S. crude oil inventory rise: The EIA report shows U.S. crude inventories at a 7-month high, adding pressure on prices. 

Supply-Demand & Market Impact 

Sharp oil price decline: Brent crude fell 4.9%, while WTI crude dropped 4.8% over the past week, reflecting supply surplus concerns.  Economic growth & oil demand: Uncertainty in U.S. trade policy may slow business investments, negatively affecting oil demand. Meanwhile, China’s oil demand remains weak, with crude oil imports declining 1.9% in 2024. 

TECHNICAL ANALYSIS 

Key Resistance Levels 

●    $68.65: Nearest resistance; if prices recover, this level should be monitored for reactions. 

●    $70.45: Strong resistance aligning with the 89-day EMA, which was previously a key support level but has now turned into resistance. 

●    $72.55 - $73.00: Major resistance zone, coinciding with the 200-day EMA, making it difficult to break if the downtrend persists. 

Key Support Levels 

●    $65.35: Most critical support; a breakdown could drive prices even lower. 

●    $63.00 - $64.00: Next potential support zone if the decline continues. 

Technical Indicators: 

EMA 34, 89, 200: The 34-day and 89-day EMAs are below the 200-day EMA, confirming the bearish trend. Prices are also trading below all three EMAs, signaling strong selling pressure. 

RSI: 33.81, approaching oversold territory (below 30), indicating a possible short-term rebound. However, the overall trend remains bearish, and confirmation signals are needed before considering buy positions. 

Trading volume: Currently at average levels, showing no clear reversal signals yet. If prices drop further with high volume, it could trigger a break below the $65.35 support. 

WTI crude oil remains in a strong downtrend, with supply pressures and economic concerns weighing on prices. A short-term rebound is possible due to oversold RSI, but the overall bearish trend remains intact. Investors should monitor price action at key support and resistance levels, especially around $65.35 and $68.65. 

S&P 500 (SPX) 
 
Prediction: Decrease 

The S&P 500 remains under strong downward pressure, having already broken several key support levels and is now testing the 200-day EMA. If the price holds above this level, a short-term rebound could occur. However, a break below it would confirm the continuation of the downtrend. 

FUNDAMENTAL ANALYSIS 

Escalating Trade Tensions under Trump Administration 

The U.S. has raised tariffs on Chinese imports while temporarily waiving tariffs on goods from Mexico and Canada. 

The market is concerned that unpredictable trade policies could negatively affect U.S. economic growth. 

U.S. trade deficit surged 34% in January 2025, highlighting economic imbalances and raising concerns about future growth prospects. 

Labor Market & Jobs Report 

Investors await the Non-Farm Payrolls (NFP) report on Friday, which is expected to show 160,000 new jobs in February, up from 143,000 in January. 

Jobless claims have decreased, but tech and government sectors are experiencing the largest job cuts since July 2020. 
Investors are closely watching the data to assess the Fed’s monetary policy stance. 

Federal Reserve Monetary Policy 

Investors anticipate the first Fed rate cut in June 2025, with a 25 basis point reduction. 

10-year U.S. Treasury yields have risen to 4.282%, reflecting inflation concerns and investor risk aversion. 

Market Sentiment & Capital Flows 

CBOE Volatility Index (VIX) has surged to 24.87, the highest level since December 2024, indicating rising uncertainty.  Investors are moving away from risk assets, with technology, real estate, and consumer discretionary sectors seeing the sharpest declines.  The Nasdaq has officially entered correction territory, dropping more than 10.4% from its December 2024 peak. 

TECHNICAL ANALYSIS 

Key Resistance Levels 

●    5,866.43 – Immediate resistance. 

●    6,004.02 – Strong resistance zone, where the price previously reversed downward. 

Key Support Levels 

●    5,738.01 (200-day EMA) – Crucial support; holding above this level could trigger a short-term rebound. 

●    5,622.44 – Next support if the 200-day EMA breaks. 

●    5,468.34 – Major support zone; breaking below this level would confirm a deeper downtrend. 

Technical Indicators: 

EMA 34 & EMA 89 – Price has dropped below both EMAs, confirming a short-term bearish trend. 

RSI: 33.95 – Approaching oversold territory (below 30), suggesting a potential short-term bounce. 

Trading Volume – Remains elevated, indicating strong selling pressure. 

The S&P 500 is in a bearish phase, with high volatility and strong selling pressure. While a short-term rebound is possible due to oversold RSI levels, the overall trend remains negative. Investors should monitor price action around the 200-day EMA (5,738.01) for potential breakdowns or reversals. 

 

 

 

 

 

 

 

 

 

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