Crude Oil’s 6-Day Losing Streak On Geopolitics

Oil prices have dropped 6 days in a row as markets seemingly focus on oversupply concerns after OPEC raised its oil production targets and a week full of geopolitical events, including advances in tariff negotiations and the prospect of a resolution to the war in Ukraine.

Latest Developments

• Crude could be set for a seven-day losing streak with another lower close today (Friday), the longest since mid-2021
• Markets shrug off secondary tariffs targeting Russian crude exports amid hopes the conflict in Ukraine can be resolved
• Reports suggest Trump and Putin could meet as early as next week to reach an agreement on a ceasefire in Ukraine.
• OPEC+ is raising production again.

Tariffs and Russian Talks Weigh on Crude

Oil prices are set to , with WTI around the $64 per barrel mark.

This is despite US President Donald Trump threatening secondary tariffs and even sanctions on countries that buy Russian oil in a bid to get its President, Vladimir Putin, to the negotiation table. Trump applied a 25% additional tariff on Indian goods, even as the two countries are in the final stages of negotiating a trade deal. The move could threaten as much as 3.5 million barrels per day, and early reports on Friday suggested that Indian refiners are already switching to non-Russian suppliers.

The markets, however, do not seem concerned. If Russia and Ukraine reach a ceasefire, it could mean that secondary tariffs will not be implemented. Reportedly, a meeting between . A meeting at that level increases the chance of a tangible result.

Meanwhile, shaky US job numbers combined with expectations that OPEC will increase production yet again have left traders worried that the market will face oversupply in the short term. At the current rate, the voluntary production curtailments by OPEC+ members would end in September.

Some Room For Bulls

Crude prices have been on the longest downward run since 2021, which could lead traders to look for signs of exhaustion in the move.

What could provide some hope is increasing demand from compared to a year ago. The demand from the Asian giant was attributed to restocking after refiner maintenance and opportunistic buying among independent refiners, given the lower prices. Trump said earlier this week that China could be hit with tariffs similar to India if it keeps buying Russian crude.

WTI Double Bottom?

Continued price declines in WTI oil took the commodity down to $63 per barrel, where a potential double bottom formation may ensue.

The support coincides with the lower VWAP, which appears to flatten out. However, the RSI is near 40, implying there is still room for another leg down, with support seen at the $60 handle.

If the double bottom formation materialises in the market, the first resistance level for the oil bull might sit at a flat VWAP of $66.50, followed by the upper VWAP at $70.

Source: SpreadEx | Light Crude, Spot