Crude Stabilizes After Historic Sell-Off: WTI And Brent Show Signs Of Life

(MENAFN- The Rio Times) Oil markets are showing modest gains this morning as traders attempt to find stability after last week's dramatic sell-off. Brent crude is trading at $64.695, up $0.100 (+0.15%), while WTI stands at $61.145, up $0.080 (+0.13%).

This slight recovery comes after oil touched multi-year lows amid escalating trade tensions and recession fears. Oil prices have rebounded cautiously in early Tuesday trading after Monday's continued decline.

Brent gained 1.14% to reach $64.94, while WTI rose 1.33% to $61.50 in overnight trading. This marks a tentative recovery from yesterday's session when prices touched their lowest levels since the pandemic, with WTI briefly dipping below $60 per barrel for the first time since 2021.

The recovery reflects bargain-hunting after crude prices experienced their largest weekly loss in two years last week. However, traders remain cautious as geopolitical tensions continue to dominate sentiment.
Monday's Market Performance
Monday's session saw continued pressure on oil prices, with the May WTI contract settling at $60.70, down $1.29 (-2.08%), with a daily range between $58.95 and $63.90. The June Brent crude contract settled at $64.21, down $1.37 (-2.09%), trading between $62.51 and $67.41.



However, Armenian news sources report that by the end of Monday's session, WTI had recovered somewhat, closing up 3.29% at $61.53, with Brent gaining 3.11% to close at $65.05.
Driving Factors Behind Recent Price Movements
Escalating US-China Trade Tensions
The primary market driver remains President Trump's tariff policies. On Monday, Trump threatened to impose additional 50% tariffs on China if Beijing doesn't withdraw its 34% retaliatory duties on U.S. exports by today (April 8). This ultimatum has significantly increased market uncertainty.

"The uncertainty surrounding tariff regulations remains very pronounced. Several major Wall Street banks are revising down economic forecasts and indicating a significant increase in recession probabilities," commented Harry Tchilinguirian from Onyx Capital Group.
Recession Fears Growing
Goldman Sachs raised its U.S. recession probability forecast from 35% to 45% on Sunday, citing "sharp tightening of financial conditions and a spike in policy uncertainty". JPMorgan has similarly increased its global recession forecast to 60%.

These recession concerns are directly impacting oil demand forecasts. Goldman Sachs analysts have reduced their year-end price targets for Brent to $62 per barrel and WTI to $58, with additional downside expected in 2026.
OPEC+ Production Increase
Adding to bearish sentiment, eight key OPEC+ producers (including Saudi Arabia, Russia, and UAE) agreed last week to accelerate planned production increases, boosting output by 411,000 barrels per day starting in May-nearly triple the previously anticipated volume.

According to David Morrison, senior market analyst at Trade Nation, this decision dealt a "double whammy" to already struggling oil prices.
Technical Analysis
WTI crude has settled below all its key moving averages, including the 5-day (66.56), 20-day (67.76), 50-day (69.15), 100-day (69.59), and 200-day (70.26). Similarly, Brent crude is trading below all its significant moving averages.

The Relative Strength Indicator (RSI) for crude is at a "neutral" 47, suggesting no immediate directional bias. Current resistance is pegged at $70.15 (Upper-Bollinger Band) with near-term support at $68.90.
Market Sentiment and Positioning
The latest Commitments of Traders (COT) report shows commercials with a net short position of -195,602 contracts (a decrease in short positions by 13,286 from the previous week), while non-commercials are net long 185,522 contracts (a decrease of 11,539 long positions).

This suggests some reduction in bearish sentiment from commercial traders but decreased bullish positioning from speculators.
Impact on Energy Equities
Energy stocks have been significantly impacted by crude's decline. On Monday, Exxon Mobil was down nearly 2% (and down 13% since Trump's tariff announcement last week), Chevron declined nearly 2% (down 15% since the announcement), and Shell dropped almost 3% (down 14%).

With WTI hovering around $60-61 per barrel, prices are now below the $65 break-even threshold identified by the Federal Reserve Bank of Dallas for Permian Basin operators like Chevron and Exxon Mobil.
Global Market Reactions
Asian equity markets showed mixed performance overnight, with Japan's Nikkei 225 up 5.7%, Hong Kong's Hang Seng gaining 2.4%, and South Korea's KOSPI rising 1.3%. This represents a potential stabilization after Monday's steep declines when the Hang Seng Index fell over 13% and the CSI300 index dropped over 7%.
Market Outlook
Wall Street analysts, including those from Citi, believe there may be a potential price floor around $60 per barrel, citing OPEC+ budgetary requirements and the U.S. Administration's interest in maintaining the economic viability of the domestic shale industry.

However, UBS analysts warn that Trump's comprehensive tariffs could potentially reduce U.S. economic growth by 2 percentage points this year and push inflation close to 5%.

HSBC has reduced its 2025 global oil growth forecast from 1 million bpd to 0.8 million bpd, attributing this adjustment to the tariffs and OPEC+ decisions.
Looking Ahead
Market participants will be closely watching today's deadline for China to withdraw its retaliatory tariffs, as further escalation could trigger another round of selling. Additionally, traders will monitor statements from OPEC+ members regarding potential responses to the price collapse, and upcoming U.S. inventory data for signs of changing demand patterns.

The speculative price range for WTI crude oil in the coming days is expected to be between $59.700 and $63.500, with volatility remaining elevated.

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