Crude Oil: Extending Gains After US-China Trade Deal

Paul-Rejczak Paul Rejczak May 12, 2025

Crude oil extends its uptrend sharply -- is $65-66 resistance in sight?

Crude oil closed 1.85% higher on Friday, extending its short-term uptrend, and today, it's surging by an additional 3.7% as markets react positively to the US-China trade deal announced over the weekend. This strong upward momentum has pushed WTI crude above $63.

For oil markets specifically, these developments are worth monitoring:

  • The US and China have agreed to a 90-day pause in tariff escalation, with the US cutting tariffs to 10% (plus a 20% fentanyl-related tariff), while China has reduced duties on US imports to 10%.
  • WTI crude contracts rose by more than 4% last week on optimism over potential de-escalation in Trump's tariff agenda.
  • Key CPI data due tomorrow could influence market sentiment and Fed policy expectations.
  • OPEC+ plans to increase oil output in May and June are tempering price gains, shortening their production cut timeline from 18 to 14 months.

 

Crude Oil: Extending Gains After US-China Trade Deal - Image 1

 

Conclusion

Crude oil is surging on the positive US-China trade deal development, which reduces concerns about global economic activity and improves the demand outlook, especially in China. However, the market faces significant resistance in the $65-66 range, marked by previous medium- to long-term supports.

For now, my short-term outlook is neutral.

Here’s the breakdown:

  • Crude oil is gaining 3.7% as the US-China trade deal significantly improves market sentiment.
  • The $65-66 resistance level presents a critical technical barrier that may limit further gains.
  • OPEC+ production increase plans and uncertainty around US-Iran nuclear talks could cap price gains.

 

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Thank you.

Paul Rejczak,
Stock Trading Strategist