Oil prices continued their bullish momentum on Tuesday, supported by signals of tightening supply from Russia and Iran. Traders were quick to re-enter long-term long positions after crude built a support base inside the correction zone from $72.11 to $70.38, pushing prices above key moving averages. However, ongoing concerns about U.S. trade tariffs are a potential limit to further gains.
Light crude oil futures are trading at $73.23, up $0.91 or +1.26%.
Light crude futures gained strength after breaching the 200-day moving average at $70.74 and the 50-day moving average at $71.24. With the market now on the strong side of these key levels, the run towards a 50% short-term correction at $74.94 seems increasingly likely. This technical setup indicates additional bullish potential, provided fundamentals continue to support the move.
Russian and Iranian supply pressures fuel rally
Concerns about tightening supply played a key role in Tuesday’s rise. Russian crude production fell to 8.962 million barrels per day in January, down 16,000 barrels from its OPEC+ quota. The shortage, while marginal, alleviates oversupply fears and reinforces bullish sentiment.
In addition, U.S. sanctions on Russian oil shipments to China and India have created logistical bottlenecks, limiting export flows from the world’s second-largest crude oil supplier. Iran faces similar challenges, with new U.S. sanctions targeting its oil networks. These supply turbulence has reignited buying interest after weeks of bearish sentiment.
While supply-side constraints support higher prices, trade tensions remain demand headwinds. On Monday, President Trump raised tariffs on steel and aluminum to 25%, escalating the risk of a multi-front trade war.
Oil prices rise as Russia’s production falls, sanctions
Oil prices rose on Tuesday as Russia’s output remained below OPEC+ quotas, while sanctions and export bans tightened global supply.
International benchmark Brent crude rose 0.5%, trading at $76.21 a barrel, up from $75.81 at the previous session’s close.
U.S. West Texas Intermediate crude rose 0.5%, to $72.55 a barrel, compared to the previous session’s close at $72.19.
Oil prices rose around 2% in the previous session, driven by signs of tightening supply, recovering after three consecutive weeks of losses.
Prices for the two benchmarks continued to rise amid growing supply concerns as Russian oil production remained below OPEC+’s, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and some oil producers including Russia.
Meanwhile, concerns that global trade tensions could negatively affect economic growth and higher interest rates by the US Federal Reserve are keeping price increases under control.
In addition, news that European countries are planning to seize the Russian “shadow fleet” has increased fears in the markets. U.S. sanctions targeting Russian oil tankers, producers and insurance companies last month significantly disrupted Russian oil shipments to China and India escalating the risk of a multi-front trade war.
Disturbances in Russian fuel exports are driving up monetary oil prices, especially in the Middle East. Russia’s Federal Monopoly Authority has imposed a one-month ban on oil exports on major producers to stabilize gasoline prices.
In addition, the US administration announced new sanctions on networks transporting Iranian oil to China. US President Donald Trump has reimposed a policy of “maximum pressure” on Iran’s oil exports.
Brent crude price rises amid supply concerns
The price of Brent crude rose again amid signs of shrinking Russian supplies and increased supply risks. So far, the price of oil has risen 3% from last week’s low of $73.94 a barrel with its Feb. 3 high of $77.05 and its 200-day simple moving average at $77.39 in the crosshairs.
Potential slippages may find support along its 55-day SMA at $74.98.
A drop from last week’s low of $73.94 would open the way to the $73.00 zone.
Silver price holds together
Spot silver is trading again below its mid-December high of $32.33 an ounce, after falling from a three-month high last week at $32.65.
In the event of a rally above the high of $32.65, the high of late September and early October 2024 at $32.71 will be targeted at $32.96.
November 19-25 high may offer $31.53 to $31.48 short-term support.
Copper prices extend their rise
The rapid rise in copper prices so far has led to $4.7145, where the May 28, 2024 high of $4.90 represents the next bullish target before the psychological level of $5.0000.
Potential slippages may find support around the June 12, 2024 high at $4.6123 or June 20, 2024 high at $4.5888. These supply turbulence has reignited buying interest after weeks of bearish sentiment.
Russian Deputy Energy Minister Pavel Sorokin said at Indian Energy Week that current oil prices allow producers a “decent level of profit for reinvestment” and give consumers an understanding of the situation, i.e. prices that allow them to plan business and make a profit.
