Crude Oil (WTI) Outlook: Tariffs, Inflation Fears, and Key Price Levels to Watch

Crude oil (WTI) prices are under renewed focus following Donald Trump’s latest tariff measures on Mexico and Canada. The move has sparked market uncertainty, with investors worried that rising inflation could slow down Federal Reserve rate cuts, impacting various asset classes, including stocks, indices, and commodities.

Higher inflation could be bullish for oil prices, particularly as trade war concerns grow and potential supply disruptions loom from the United States’ two largest crude suppliers—Mexico and Canada.

Crude Oil Price Action and Key Resistance Levels

Currently, WTI crude oil is trading at $72.23 per barrel. A key technical development occurred in the week of January 20, when WTI faced another rejection at the upper trendline resistance. This marks the third rejection since September 2023, reinforcing the importance of this level.

Despite these rejections, medium-term momentum appears to have shifted bullish, which could provide support for oil prices in the near term.

Technical Analysis: Support and Resistance Zones

• Support Base: Oil prices have been consolidating since September 2023, with the $66-$67 range acting as a solid support level. A break below this zone could trigger a deeper decline.
• Trendline Resistance: The key resistance range now sits at $74-$75.
• Breakout Potential: If WTI breaks and closes above $74-$75, traders may look to enter long positions in anticipation of a breakout rally that could reverse the long-term bearish trend.

MACD and Momentum Indicators: Bullish Signals Emerging

• The MACD indicator remains bullish, following four months of oversold conditions.
• The recent pullback from $72-$73 may simply be a profit-taking phase, creating room for further consolidation before another potential breakout attempt.

Final Thoughts: Will Crude Oil Prices Rally?

With tariff-related inflation fears, supply risks, and technical bullish momentum, WTI crude oil could be gearing up for a breakout. If prices successfully breach the $74-$75 resistance zone, a strong rally may unfold. However, a failure to hold above $72-$73 could lead to further consolidation or a retest of the $66-$67 support zone.