Crude oil prices are sliding further, briefly dipping below $68 per barrel as European markets open. This downward trend defies two significant bullish signals: OPEC+ has extended voluntary production cuts through April 2025, and geopolitical tensions remain high. Under normal circumstances, these developments would heighten supply concerns and drive prices higher. However, traders are focusing on signs of weakening demand, particularly from China, and the prospect of a stronger US dollar. This outlook is supported by the resilience of the US economy and the Federal Reserve’s likely need to maintain elevated interest rates for an extended period. Adding to the dynamic is the incoming US administration’s plan to increase import tariffs, a move expected to drive inflation higher and further constrain the Fed’s ability to lower rates. These factors strengthen the dollar, which, in turn, exerts downward pressure on dollar-denominated oil prices. Amid this backdrop, today’s release of US labour data is a key focus for traders. A stronger-than-expected reading would likely boost the dollar and weigh on crude prices, while a weaker report could have the opposite effect.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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