China Tariffs Persist, Oil's Retracement Deepens

Key Market Events

• OPEC shifts reliance from IEA sources to Kpler, OilX, and ESAI
• Chinese Manufacturing PMI miss expectations, while US ISM PMI surges to near two-year highs
• 10% US tariffs on Chinese imports remain in place
• Oil prices drop below $72 following a short-lived spike on tariff concerns

OPEC JMMC Meeting Highlights

At its first meeting of 2025, OPEC upheld the production quotas agreed upon in December 2024 as the impact of the Trump administration on the oil market remains uncertain, with risks stemming from tariffs, sanctions, and potential overproduction. A notable shift for OPEC in 2025 is its decision to move away from IEA data sources in favor of Kpler, OilX, and ESAI. But who are they?

• Kpler: Provides real-time data and analytics on global commodity markets, including energy, maritime, and trade sectors.
• OilX: Combines traditional oil statistics with real-time satellite and maritime intelligence to offer the most precise oil market assessments.
• ESAI: A network of environmental professionals and researchers, facilitating communication and insights in the energy and environmental sectors.

US & Chinese Economic Indicators

On Monday, the Chinese Caixin Manufacturing PMI fell short of expectations, coming in at 50.1, hovering at the borderline expansion level. Meanwhile, the US ISM Manufacturing PMI climbed to 50.9, reaching its highest level since October 2022 and surpassing the 50-expansion threshold.

Why It Matters: • ISM PMIs are considered early indicators of economic growth, with implications for inflation trends and oil demand potential.

Crude Oil Forecast: 3-Day Time Frame – Log Scale

Source: Tradingview

Crude oil dipped below $72 following a short-lived rally on tariff concerns. The next key support levels to watch are $69.50 and $66. A deeper decline could signal the start of a more extended bearish trend.

Market Bias: Despite current weakness, the support zone—intact since December 2021—suggests a neutral-to-bullish outlook, unless a decisive break and close below $66 occurs.

Bearish Breakout Scenario: If oil breaks below $66, downside targets align with the 0.618 Fibonacci retracement zone of the 2020-2022 uptrend, pointing to $60 and $55 as the next potential levels.

Written by Razan Hilal, CMT

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