wti-usd
Trump’s Request and Weakening Chinese Economy Will Keep Oil Bearish, Tariffs or No Tariffs
Skerdian Meta•Wednesday, February 5, 2025•2 min read
Oil jumped to $73 yesterday, but the Chinese economy continues to weaken and Donald Trump wants it cheap so the trend will likely remain bearish.
WTI crude oil futures extended their decline, reaching $70.40 per barrel yesterday during the Asian session, following President Donald Trump’s decision to postpone tariff threats against Canada and Mexico for a month. His continued remarks advocating lower oil prices and urging Saudi Arabia to boost production added further pressure on crude markets.
This temporary suspension came after discussions with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau, which helped ease risk aversion in global financial markets. As a result, crude oil rebounded above $73 per barrel, gaining $2.50, as investors speculated on a potential trade deal between the US and China.
Market Uncertainty and China’s Response Weigh on Prices
Despite the relief in North American trade tensions, uncertainty lingers due to China’s retaliation against Trump’s newly enforced 10% tariff on Chinese imports. Market sentiment remains fragile, as Trump has hinted at potential renegotiations with Beijing that could alter the tariff landscape.
WTI Crude Oil Chart H4 – MAs Continue to Hold As Resistance
This uncertainty limited WTI crude’s upside, as prices struggled against key resistance levels on the H4 chart’s moving averages. Buyers failed to sustain crude prices above $73, leading to a renewed decline in the Asian session. Adding to bearish sentiment, China’s Caixin services report indicated further economic slowdown, signaling a possible contraction and reinforcing concerns about global demand, following a similar reading in the Caixin manufacturing on Monday.
Last night’s data suggests a deceleration in China’s services sector, with growth losing momentum at the start of the year. Although still in expansion territory (above 50), the slowdown raises concerns about domestic demand and broader economic stability. This aligns with previous reports of weakening consumer confidence and sluggish economic recovery, potentially prompting further policy support from Beijing to sustain growth.
China’s January Caixin Services and Composite PMI Report
- Caixin Services PMI:
- Reported at 51.0 points, falling short of the 52.3-point forecast.
- A decline from 52.2 points in December, indicating a slowdown in service sector expansion.
- Caixin Composite PMI:
- Recorded at 51.1 points, slightly down from 51.4 points previously.
- Reflects a marginal weakening in overall business activity across both manufacturing and services sectors.
From the Caixin report commentary:
US WTI Crude Oil Live Chart
WTI
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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