Crude Oil Accelerates Downtrend Amid Tariff Turmoil

Paul-Rejczak Paul Rejczak Apr 09, 2025

Is crude oil forming a bottom after steep declines, or will the bearish momentum continue amid trade tensions?

Crude oil lost 1.85% on Tuesday, extending its downtrend and reaching new lows around $58. However, today's trading has seen an acceleration of the selling pressure, with prices plummeting 5.8% to the $55 level – marking four-year lows.

For oil markets specifically, these developments are bearish:

  • The market is experiencing exceptional volatility due to the escalating trade war between the U.S. and China.
  • China's announcement of 84% tariffs on U.S. goods, up from 34% previously announced.
  • U.S. President Trump's implementation of a 50% hike on Chinese imports.
  • Growing fears of a global recession that could significantly reduce oil demand.

Crude Oil Accelerates Downtrend Amid Tariff Turmoil - Image 1

 

Conclusion

Crude oil's technical picture has severely deteriorated following the breakdown below critical support levels. The intense selling pressure amid escalating trade tensions has created a highly uncertain environment.

With prices at their lowest since 2021, we may see some technical bounces from oversold conditions. However, the risk/reward ratio does not currently justify taking any positions.

For now, my short-term outlook is neutral.

Here’s the breakdown:

  • Crude oil has broken below crucial support levels amid escalation in trade tensions.
  • The medium-term outlook appears bearish following technical damage.
  • A relief rally toward broken support is possible in the near term.
  • In my opinion, the short-term outlook is neutral.

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Thank you.

Paul Rejczak,
Stock Trading Strategist