Crude Oil Week Ahead: Tariff Risks, OPEC Report, and US CPI

Key Events to Watch:

• Chinese CPI, PPI, and new loan data
• Trump tariff negotiations (Monday or Tuesday)
• Fed Chair Powell’s testimony on semiannual monetary policy
• US CPI and FOMC member insights

Chinese Data vs. Tariff Risks

China’s short-term economic boost may have ended as the trade war with the US intensifies. Initial tariff headlines caused brief price spikes, but their broader economic impact remains contractionary, reducing oil demand potential. Chinese inflation for January is expected to rise due to pre-tariff economic activity and export boosts, while new loans remain uncertain amid heightened risks and US rivalry. However, given China’s strong innovation-driven economy, resilience against US headwinds can be expected.

US Economic Data vs. Tariff Risks

US non-farm payrolls fell to 143K, below the 169K forecast, while unemployment dropped to an eight-month low of 4.0%, leaving markets uncertain. Key indicators between next week’s US CPI and Powell’s testimony will shape inflation expectations and their impact on economic growth and crude oil demand. However, with Trump advocating lower prices and high production, a bearish outlook dominates US crude markets.

OPEC Monthly Report vs. Tariff Risks

OPEC’s January 2025 report maintained a 1.4M barrel demand projection, with 0.1M from OECD nations and 1.3M from non-OECD. However, ongoing tariff and trade war risks may lead to downward revisions. Tariffs increase costs, slow economic growth, and disrupt supply chains, while geopolitical tensions and potential trade retaliation could cause short-term price spikes. Nonetheless, the overall bearish trend persists.

Technical Analysis: Quantifying Uncertainties

Crude Oil Week Ahead: 3-Day Time Frame – Log Scale

Source: Tradingview

With tariff headlines shifting towards negotiations, oil briefly spiked above $72 before retreating toward the key support between $70 and $69.5. Bearish momentum remains dominant, and a close below $69.5 could extend losses toward $66, $64, $60, and $55. On the upside, short-lived spikes may occur as oil approaches a four-year support zone dating back to December 2021, with key resistance levels at $72, $76, and $80.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves