Oil Market on the Edge: OPEC+ Decisions, Tariffs, and Trends Shaping the Future

The oil market is navigating mixed signals as OPEC+ decisions, geopolitical developments, and technical trends shape the landscape. Prices have steadied amid expectations of delayed production increases from OPEC+, but bearish factors such as weak refined product demand and rising inventories persist. At the same time, geopolitical uncertainties and evolving policies under Donald Trump’s presidency add further complexity. With a tight trading range and key technical levels in play, traders are closely monitoring these interconnected forces to assess the market’s next direction.

Oil prices steadied in volatile trading as markets balanced mixed signals ahead of the OPEC+ meeting and the US Thanksgiving holiday. Expectations that OPEC+ will delay a production increase provided support, helping to ease concerns of an oversupply. However, falling gasoline and diesel futures, driven by high Gulf Coast inventories and weak diesel demand, added downward pressure.
WTI settled below $69 per barrel, while Brent held under $73. Geopolitical tensions in the Middle East showed signs of easing, though traders remain cautious about potential disruptions in the region. At the same time, muted demand from China and increasing global supplies are contributing to bearish sentiment. Crude’s narrow trading range reflects market uncertainty as investors monitor potential changes in US sanctions and energy policies under Donald Trump’s second presidency.

Trump’s proposed tariffs on imports from Canada and Mexico could significantly raise US gasoline prices, particularly during peak summer driving season. Canada and Mexico, which supply 70% of US oil imports, provide the heavy crude essential for US refiners. A 25% tariff would increase costs for refiners, potentially adding up to 50 cents per gallon for Midwest drivers, contradicting Trump’s goal of lowering energy costs.
While some analysts believe the tariffs are unlikely to materialize, their implementation could disrupt North American energy trade, strain refiners reliant on Canadian crude, and tighten global oil markets. The move highlights the continued US dependency on crude imports despite record domestic production.

OPEC+ faces a tough decision in its upcoming meeting: extend supply cuts into 2025 or risk a significant price slump as global demand slows and new supplies from the Americas increase. Despite prior plans to gradually raise production, factors like weaker Chinese demand and growing electric vehicle adoption have shifted market dynamics, with a potential oversupply looming next year.
The International Energy Agency (IEA) warns of a surplus exceeding 1 million barrels a day, while analysts predict oil prices could fall to $60 or lower if production increases. However, geopolitical uncertainties, including potential US sanctions under a second Trump presidency, may influence the market. OPEC+ members, some already struggling with compliance, must weigh long-term stability against short-term financial pressures.

The average input of crude oil at US refineries was 16.2 million barrels per day for the week ending November 15, 2024, down 281,000 barrels per day from the previous week, with refineries operating at 90.2% capacity. Gasoline and distillate production declined to 9.3 million and 4.8 million barrels per day, respectively. Crude oil imports rose to 7.7 million barrels per day, a 1.2 million barrel increase from the prior week.
Commercial crude oil inventories grew by 0.5 million barrels to 430.3 million, 4% below the five-year average. Gasoline inventories increased by 2.1 million barrels, while distillate inventories slightly declined by 0.1 million barrels, both remaining 4% below the five-year average. Propane/propylene stocks declined by 700,000 barrels but are 10% above the five-year average. Total commercial petroleum inventories rose by 3.0 million barrels.
Over the last four weeks, total products supplied averaged 20.7 million barrels per day, up 1.2% from the same period last year. Gasoline demand increased slightly by 0.5%, while distillate demand dropped by 6.4%. Jet fuel demand fell 1.3% year-over-year.

Since reaching a peak of $78.27 per barrel on October 8, crude oil prices have entered a consolidation phase with a lower boundary at $66.45. The current bearish momentum is reinforced by prices remaining below the 20 and 50-period Exponential Moving Averages (EMAs). Moreover, the momentum oscillator has fallen below the 100 level, and the Relative Strength Index (RSI) is now under 50, both signaling a slowdown in momentum.
If sellers continue to dominate the market, traders may focus on potential downward targets of $66.45, $65.07, and $61.70. Conversely, if bullish momentum begins to develop, traders may shift their attention to potential upward targets of $71.31, $72.47, and $73.72.

The oil market remains in a state of flux, with OPEC+ decisions, shifting geopolitical dynamics, and evolving technical trends contributing to a complex landscape. While steady prices reflect cautious optimism about potential production curbs, bearish factors like rising inventories, muted demand from China, and weak refined product markets persist. With key technical levels in focus and significant policy shifts on the horizon, traders and market participants will continue to monitor these developments closely to gauge the market’s next direction. Balancing short-term pressures against long-term stability remains the central challenge for the global energy sector.