The oil price rebounded yesterday but now moves sideways - has the market found temporary bottom amid mixed signals?
Crude oil closed 1.77% higher on Thursday, showing a rebound after recent declines below the $60 level. Today, however, the market is moving sideways as uncertainty lingers following yesterday's rebound and mixed economic data. The monthly jobs data came in stronger than expected with Nonfarm Payrolls release showing +177,000 vs. expected +138,000.
For oil markets specifically, these developments are worth monitoring:
- China's Commerce Ministry said Beijing is "evaluating" a proposal from Washington to hold talks aimed at addressing U.S. tariffs, signaling a possible easing of trade tensions that have rattled global markets.
- Saudi Arabia, de facto leader of OPEC+, has reportedly briefed allies that it's unwilling to prop up oil prices with further supply cuts.
- Trump has threatened to impose secondary sanctions on buyers of Iranian oil, with China being the world's largest importer of Iran's crude, adding another layer of complexity to potential U.S.-China trade talks.
- Markets remain highly sensitive to news, with oil trading largely following broader market sentiment.
Conclusion
Crude oil has rebounded after nearing its early April lows but faces continued uncertainty as traders digest mixed economic data, trade tensions. The market showed strength yesterday but appears to be consolidating today.
For now, my short-term outlook is neutral.
I think that no positions are justified from the risk/reward point of view.
Here’s the breakdown:
- Yesterday's 1.77% gain provided some relief after the sharp declines earlier in the week, but today's sideways movement suggests caution.
- Strong jobs data indicates economic resilience, which could support oil demand, but broader concerns about global growth remain.
- OPEC+ supply decisions next week could significantly impact prices, with Saudi Arabia reportedly unwilling to cut production further.
- U.S.-China trade tensions are directly impacting oil demand forecasts.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist