Crude oil prices face resistance as optimism over a possible peace deal between Russia and Ukraine eases supply concerns. A possible lifting of sanctions on Moscow could increase global energy supplies. As of now, WTI crude oil is quoted at $75.11 and Brent crude oil is quoted at $70.72.
US Treasury Secretary: Committed to cutting Iranian oil exports to 100,000 barrels per day; if Trump orders, further sanctions will be imposed on the Russian energy industry. The monthly rate of retail sales in the United States in January was -0.9%, the largest drop since January 2024.
News related to Russia and Ukraine:
US President Trump: My meeting with Putin may take place soon; someone tried to break up Musk and me but failed.
US Vice President said that "military means" would not be ruled out to promote peace talks with Russia. Vance said his remarks were distorted.
Russian media: Russian and US officials will hold a meeting on Ukraine in Saudi Arabia on the 18th. The report said that US representatives are expected to include US Secretary of State Rubio, US President's National Security Advisor Waltz and US Middle East Envoy Witkov. There are also reports that Russian Foreign Minister Lavrov is preparing to visit Saudi Arabia.
US media: The Trump administration proposed that Ukraine repay its aid with 50% of rare earth minerals; Ukraine rejected the US mineral requirements, and Ukraine has not responded yet.
The Trump administration "loosened the reins", and a large number of US-made heavy bombs arrived in Israel late at night.
US crude oil futures CLc1 are expected to break the support level of $70.07 per barrel and fall to around $68.94.
We have separated a three-wave cycle starting at $75.17 for forecast analysis. The current C wave has fallen below its 61.8% forecast level of $70.76.
This wave is likely to extend to $68.94. The resistance level is $71.32, and if it breaks through this resistance level, the price may rise to the $71.88-72.58 range.
On the daily chart, the contract has broken below the $71.19 support level. This breakout opens the way for prices to move down to the $67.38-68.93 range. The ultimate target could be $66.98, the bottom of wave (b).
We do not take any view on the likelihood of an end to the ongoing Russia-Ukraine conflict. We currently believe that OPEC+ will return to the market in the second half of 2025 with only a small increase in oil production. We expect Brent crude oil prices to average $78/73 in 2025/2026. We believe that Russian oil production is currently limited by compliance with OPEC+ production cuts rather than Western sanctions. Therefore, a ceasefire agreement in Ukraine that lifts sanctions will not increase Russian supply in the short term. However, the ceasefire agreement could still have two modest indirect effects that would reduce European oil prices by a total of $3/bbl.
First, the potential end of the EU embargo on Russian oil would allow more than 60 million barrels of excess oil on the water (due to long, inefficient trade routes) to return to commercially available storage. This would be equivalent to releasing the largest strategic oil reserve and reduce Brent crude prices by $2/bbl through weaker time spreads.
Second, the unwinding of current redirections would also significantly ease the global tanker market. We estimate that the end of Russian oil redirections (caused by the EU embargo) would help reduce tanker costs by another 20% from our current expectations, equivalent to about $1/bbl in clean product (gasoline and diesel) tanker freight rates. Since Europe imports marginal refined products from abroad, lower freight costs will reduce delivered oil prices and will be largely passed on to domestic consumer prices.
Last week, Brent crude oil's decline stalled near $74, and after this test, it rebounded initially, breaking through the steep downward channel. The first resistance is expected to be around the 200-day moving average of $77.8-78.35. It is worth noting that since last year, Brent crude oil has been struggling to stay above this moving average. If Brent crude oil breaks through the resistance of $77.8-78.35, the rebound may extend to $79.4, or even to the downward trend line resistance of $82.6 since 2023.
The sharp fluctuations in the oil market last week were mainly affected by market concerns about changes in crude oil supply, geopolitical developments, and changes in demand expectations. Although the early rise was driven by expectations of tightening crude oil exports from Russia and Iran, oil prices were later pressured to fall due to the faster-than-expected accumulation of U.S. crude oil inventories, the Federal Reserve's tough stance and the possibility of a breakthrough in the Russia-Ukraine peace talks. Traders are closely assessing whether the recovery in demand can offset the increasing downside risks to oil prices.
A recent report from JPMorgan Chase said that global oil consumption climbed to 103.4 million barrels per day, an increase of 1.4 million barrels per day from last year. The unexpected return of travel and heating fuel demand in February helped offset the downward pressure from expectations of increased supply. In addition, the easing of trade war risks also brought some boost to market sentiment. The Trump administration postponed the implementation of reciprocal tariffs, calming market concerns about a slowdown in global trade. However, this uncertainty still exists because there is a possibility that further tariff proposals will be introduced on April 1, which may affect the demand for crude oil.