Oil News: Traders Brace for Volatility as Crude Holds 200-Day Moving Average

Oil Prices Test Critical Support Amid Recent Sell-Off

Light crude oil futures edged higher on Thursday, hovering around a critical support level defined by the 50-day moving average at $70.96 and the 200-day moving average at $70.80. This technical zone is pivotal for traders, as a failure to hold could push prices toward the next downside target at $67.00.

Brent crude rose, while U.S. West Texas Intermediate (WTI) climbed. These modest gains followed a sharp 2% decline on Wednesday, triggered by a larger-than-expected build in U.S. crude and gasoline inventories, which signaled softening demand.

Adding to the pressure, market participants remain cautious over the broader economic impact of fresh U.S.-China trade tariffs, which include levies on energy products. Analysts warn that pricing volatility will persist as traders assess the fallout from these policy shifts.

At 11:30 GMT, Light Crude Oil Futures are trading $71.61, up $0.58 or +0.82%.

Supply and Demand Factors Drive Market Sentiment

The latest price recovery received some support after Saudi Aramco sharply raised its March crude prices for Asian buyers, countering the previous day’s sell-off. The move signals confidence from the world’s largest oil exporter, reinforcing expectations of stable demand in the region.

Despite this, the broader market remains wary of a slowdown in demand. U.S. crude inventories surged, reflecting weaker consumption, while gasoline stocks also climbed, adding downward pressure on prices. The demand outlook is further complicated by uncertainty surrounding China’s latest retaliatory tariffs on U.S. crude and LNG imports, set to take effect on February 10.

Several oil and gas traders are now seeking waivers from Beijing to bypass these tariffs. However, analysts suggest that while waivers might be granted for already-booked shipments, new deals will face greater scrutiny. As a result, Chinese refiners like Unipec may resort to alternative sourcing strategies, including swaps with other Asian buyers and increasing purchases from the Middle East and Russia.

Market Outlook: Oil Faces Bearish Risks Despite Short-Term Stability

While technical support has provided temporary stability, the fundamental backdrop remains bearish. The combination of rising U.S. inventories, soft demand signals, and the potential drag from U.S.-China trade tensions could limit any upside potential in the near term.

If crude prices fail to hold above the $70 support level, traders could see further downside toward $67. However, if Saudi Aramco’s pricing decision fuels stronger buying interest, a rebound toward $74 remains possible. Market participants should brace for heightened volatility as geopolitical risks and supply-demand imbalances continue to influence price action.

More Information in our Economic Calendar.