Tariff Tantrums & Rising Inventories Weighing Down on Crude Oil
One month into his presidency, Trump has injected fresh uncertainty into oil markets. His rapid-fire policies aimed at boosting production, imposing tariffs, and pushing for conflict resolutions in the Middle East and Russia—are reshaping the energy landscape. His unpredictable and bold approach to trade has left markets on edge.
Bearish sentiment is being fuelled by weak economic indicators, particularly from the U.S. and China. Trump’s policies have added uncertainty, driving price swings.
At the start of the month, Trump imposed 25% tariffs on imports from Mexico and Canada (10% on Canadian oil) and 10% on Chinese goods. However, he swiftly delayed tariffs on Mexico and Canada but kept the tariffs on China intact.
In response, China imposed tariffs of 15% on U.S. coal & LNG and 10% on crude oil, autos, and farm equipment, fuelling fears of a broader trade war that could weaken global growth & energy demand.
Trump also tightened U.S. sanctions on Iran’s crude exports and signalled stricter enforcement. While this could reduce supply, his trade policies threaten energy demand, keeping downward pressure on prices.
Further supply risks emerged as Europe ramped up efforts to weaken Russia by targeting its shadow fleet and energy exports.
Meanwhile, Trump’s push for peace in Ukraine and the Middle East has shown progress, lowering the geopolitical risk premium on crude.
However, fresh supply concerns arose after a drone attack on a pipeline belonging to the Caspian Pipeline Consortium in Russia, a key export route for Kazakhstan’s crude, disrupted shipments by 30% to 40%.
Repairs are expected to take months, adding to supply fears. Ukraine also escalated drone strikes on Russian refineries, intensifying concerns over Russian crude flows already constrained by Western sanctions.
Trump’s actions have had mixed effects, supporting oil prices in some cases while pressuring them in others. Combined with an oversupplied market, this has kept the overall outlook bearish, though uncertainty and short-term volatility persist.
U.S. CRUDE INVENTORIES CLIMB; EIA PROJECTS LOWER WTI PRICES FOR 2025-2026
Another factor weighing on WTI prices is the steady rise in crude inventories, following seasonal trends. Stockpile rises have exceeded analyst forecasts for four consecutive weeks.
Source: EIA and Investing.com
U.S. energy firms have increased crude stockpiles for four consecutive weeks, the longest streak since April 2024.
The EIA’s latest Short–Term Energy Outlook report (STEO report) reinforced a bearish outlook for WTI prices. It kept its 2025 and 2026 forecasts unchanged, with a slight 1.8% upward revision for Q1 2025. This raised the full-year 2025 estimate by 0.4% to USD 70.62/b, while the 2026 projection remained steady at USD 62.46/b.
Source: EIA STEO
The agency attributes the Q1 2025 price uptick to OPEC+ production cuts, which are expected to reduce global oil inventories by 0.5 million bpd. However, it kept price forecasts steady for the rest of 2025 and 2026, anticipating a supply increase from April 2025.
The EIA projects global oil inventories to rise by 0.9 million bpd in H2 2025 and 1.0 million bpd in 2026, driven by higher output and sluggish demand growth.
TECHNICAL INDICATORS INDICATE PERSISTENT BEARISH TREND
WTI appeared set for its first weekly gain in five weeks for the week ending 21/Feb, but bearish U.S. economic data offset support from supply disruptions in Russia.
The MACD indicator signals a renewed bearish trend, showing momentum has turned downward again after briefly easing.
The RSI hovers near the midpoint at 41.79, below its moving average of 44.34, signalling a shift toward a renewed bearish trend.
Source: TradingView
Furthermore, TradingView’s technical analysis dashboard reinforces a strong bearish trend.
COMMITMENT OF TRADERS
For the week ending 11/Feb, managed money’s net long positions in WTI crude oil (futures & options) dropped 13% WoW, marking a third weekly decline. Short positions surged 33% to 76,375 lots, while long positions inched up 0.3% to 198,612 lots.
Source: CME QuikStrike
Short positions have increased week-on-week since 28/Jan, highlighting a growing bearish sentiment among managed money.
HYPOTHETICAL TRADE SETUP
Trump’s energy, trade, and foreign policies have heightened uncertainty in oil markets, creating a push-pull effect on prices.
However, the persistent supply-demand imbalance remains. Push for higher U.S. oil output and efforts to end the Russia-Ukraine conflict will add further pressure on WTI prices by erasing war-risk premium.
While short-term price spikes and volatility are more likely, they are unlikely to alter market dynamics without a significant recovery in global oil demand.
Portfolio managers and traders can express a bearish view on WTI prices through CME Micro WTI Crude Oil Futures. These contracts provide the same crude oil exposure as standard WTI futures but at 1/10th the size, offering greater accessibility and more precise hedging options.
This paper posits a short position in CME Micro WTI Crude Oil Futures (Apr 2025) expiring on 19/Mar (MCLJ2025) with the following trade setup:
• Entry: 71.50/barrel
• Target: 67.50/barrel
• Stop: 74/barrel
• P&L at Target (per lot): +400 ((71.50 – 67.50) x 100)
• P&L at Stop (per lot): -250 ((71.50 – 74.00) x 100)
• Reward-to-Risk Ratio: 1.6x
CME Group lists a raft of products covering a range of asset classes more accessible while also enabling granular hedging for portfolio managers.
Investors can learn more about how to access these micro products by visiting CME Micro Products page on CME portal to discover micro-sized contracts to gain macro exposures.
In collaboration with the CME Group, TradingView has launched The Leap trading competition. New and upcoming traders can hone and refine their trading skills, test their trading strategies, and feel the thrill of futures trading with a vibrant global community through this paper trading competition sponsored by CME Group using virtual money and real time market data.
The competition lasts another 4 days. Please join the 60,000 others who are actively honing their trading skills using virtual money. Click here to learn more.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Bearish sentiment is being fuelled by weak economic indicators, particularly from the U.S. and China. Trump’s policies have added uncertainty, driving price swings.
At the start of the month, Trump imposed 25% tariffs on imports from Mexico and Canada (10% on Canadian oil) and 10% on Chinese goods. However, he swiftly delayed tariffs on Mexico and Canada but kept the tariffs on China intact.
In response, China imposed tariffs of 15% on U.S. coal & LNG and 10% on crude oil, autos, and farm equipment, fuelling fears of a broader trade war that could weaken global growth & energy demand.
Trump also tightened U.S. sanctions on Iran’s crude exports and signalled stricter enforcement. While this could reduce supply, his trade policies threaten energy demand, keeping downward pressure on prices.
Further supply risks emerged as Europe ramped up efforts to weaken Russia by targeting its shadow fleet and energy exports.
Meanwhile, Trump’s push for peace in Ukraine and the Middle East has shown progress, lowering the geopolitical risk premium on crude.
However, fresh supply concerns arose after a drone attack on a pipeline belonging to the Caspian Pipeline Consortium in Russia, a key export route for Kazakhstan’s crude, disrupted shipments by 30% to 40%.
Repairs are expected to take months, adding to supply fears. Ukraine also escalated drone strikes on Russian refineries, intensifying concerns over Russian crude flows already constrained by Western sanctions.
Trump’s actions have had mixed effects, supporting oil prices in some cases while pressuring them in others. Combined with an oversupplied market, this has kept the overall outlook bearish, though uncertainty and short-term volatility persist.
U.S. CRUDE INVENTORIES CLIMB; EIA PROJECTS LOWER WTI PRICES FOR 2025-2026
Another factor weighing on WTI prices is the steady rise in crude inventories, following seasonal trends. Stockpile rises have exceeded analyst forecasts for four consecutive weeks.
Source: EIA and Investing.com
U.S. energy firms have increased crude stockpiles for four consecutive weeks, the longest streak since April 2024.
The EIA’s latest Short–Term Energy Outlook report (STEO report) reinforced a bearish outlook for WTI prices. It kept its 2025 and 2026 forecasts unchanged, with a slight 1.8% upward revision for Q1 2025. This raised the full-year 2025 estimate by 0.4% to USD 70.62/b, while the 2026 projection remained steady at USD 62.46/b.
Source: EIA STEO
The agency attributes the Q1 2025 price uptick to OPEC+ production cuts, which are expected to reduce global oil inventories by 0.5 million bpd. However, it kept price forecasts steady for the rest of 2025 and 2026, anticipating a supply increase from April 2025.
The EIA projects global oil inventories to rise by 0.9 million bpd in H2 2025 and 1.0 million bpd in 2026, driven by higher output and sluggish demand growth.
TECHNICAL INDICATORS INDICATE PERSISTENT BEARISH TREND
WTI appeared set for its first weekly gain in five weeks for the week ending 21/Feb, but bearish U.S. economic data offset support from supply disruptions in Russia.
The MACD indicator signals a renewed bearish trend, showing momentum has turned downward again after briefly easing.
The RSI hovers near the midpoint at 41.79, below its moving average of 44.34, signalling a shift toward a renewed bearish trend.
Source: TradingView
Furthermore, TradingView’s technical analysis dashboard reinforces a strong bearish trend.
COMMITMENT OF TRADERS
For the week ending 11/Feb, managed money’s net long positions in WTI crude oil (futures & options) dropped 13% WoW, marking a third weekly decline. Short positions surged 33% to 76,375 lots, while long positions inched up 0.3% to 198,612 lots.
Source: CME QuikStrike
Short positions have increased week-on-week since 28/Jan, highlighting a growing bearish sentiment among managed money.
HYPOTHETICAL TRADE SETUP
Trump’s energy, trade, and foreign policies have heightened uncertainty in oil markets, creating a push-pull effect on prices.
However, the persistent supply-demand imbalance remains. Push for higher U.S. oil output and efforts to end the Russia-Ukraine conflict will add further pressure on WTI prices by erasing war-risk premium.
While short-term price spikes and volatility are more likely, they are unlikely to alter market dynamics without a significant recovery in global oil demand.
Portfolio managers and traders can express a bearish view on WTI prices through CME Micro WTI Crude Oil Futures. These contracts provide the same crude oil exposure as standard WTI futures but at 1/10th the size, offering greater accessibility and more precise hedging options.
This paper posits a short position in CME Micro WTI Crude Oil Futures (Apr 2025) expiring on 19/Mar (MCLJ2025) with the following trade setup:
• Entry: 71.50/barrel
• Target: 67.50/barrel
• Stop: 74/barrel
• P&L at Target (per lot): +400 ((71.50 – 67.50) x 100)
• P&L at Stop (per lot): -250 ((71.50 – 74.00) x 100)
• Reward-to-Risk Ratio: 1.6x
CME Group lists a raft of products covering a range of asset classes more accessible while also enabling granular hedging for portfolio managers.
Investors can learn more about how to access these micro products by visiting CME Micro Products page on CME portal to discover micro-sized contracts to gain macro exposures.
In collaboration with the CME Group, TradingView has launched The Leap trading competition. New and upcoming traders can hone and refine their trading skills, test their trading strategies, and feel the thrill of futures trading with a vibrant global community through this paper trading competition sponsored by CME Group using virtual money and real time market data.
The competition lasts another 4 days. Please join the 60,000 others who are actively honing their trading skills using virtual money. Click here to learn more.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.