The oil market is experiencing a period of uncertainty, with President Trump’s plans to boost US oil production, global demand fluctuations, and geopolitical tensions all contributing to the volatility. On February 7, 2025, crude oil prices fell by 0.32% to ₹6,210, following Trump’s reaffirmation of plans to increase US oil output.
The move is expected to drive crude prices lower, but other factors are at play. Saudi Arabia’s state oil company has raised its March crude prices sharply, driven by rising demand from China and India, as well as disruptions to Russian supply due to US sanctions. Additionally, Trump’s renewed push to eliminate Iran’s oil exports threatens to remove 1.5 million barrels per day from the market, adding to supply risks.
However, oil prices are also under pressure from an 8.7 million-barrel surge in US crude stocks, marking the largest build in nearly a year. US-China trade tensions are also weighing on sentiment, with China imposing tariffs on American coal, LNG, and crude oil, raising concerns about weaker global demand.
The Energy Information Administration (EIA) has forecast that global oil production growth will outpace demand over the next two years. The agency has raised its US oil production estimate to 13.55 million barrels per day (bpd), with the Permian Basin expected to contribute over half of total US output by 2026. Global oil production is expected to reach 104.4 million bpd in 2025, while demand is forecasted to average 104.1 million bpd, below pre-pandemic levels.
Technically, crude oil is under long liquidation, with open interest dropping 1.04% to 8,672 contracts. Support is at ₹6,170, with a break below testing ₹6,131. Resistance is at ₹6,278, and a move above could push prices towards ₹6,347.
In other commodity markets, global food prices have dropped in January, driven by sharp declines in sugar and vegetable oil prices. The FAO Food Price Index fell to 124.9 points from 127.0 in December. Meat prices also fell, while cereal prices saw a modest 0.3% increase.
Global wheat imports are also expected to decline in 2025, as top buyers like China, Indonesia, and Egypt reduce purchases due to higher domestic output and economic challenges. The USDA projects a 37% drop in Chinese wheat imports, while Indonesia shifts to domestic rice flour.
Overall, the oil market is experiencing a complex interplay of factors, with Trump’s plans, global demand fluctuations, and geopolitical tensions all contributing to the volatility. As the market navigates these challenges, investors and traders will need to stay informed and adapt to the changing landscape.
Key Takeaways:
- President Trump’s plans to boost US oil production are expected to drive crude prices lower.
- Global demand fluctuations, particularly from China and India, are supporting oil prices.
- Geopolitical tensions, including US sanctions on Russia and Iran, are adding to supply risks.
- The EIA has forecast that global oil production growth will outpace demand over the next two years.
- Global food prices have dropped in January, driven by sharp declines in sugar and vegetable oil prices.
- Global wheat imports are expected to decline in 2025, as top buyers reduce purchases due to higher domestic output and economic challenges.
In conclusion, the oil market is at a critical juncture, with President Trump’s plans to boost US oil production, global demand fluctuations, and geopolitical tensions all contributing to the volatility. As the market navigates these challenges, investors and traders must stay informed and adapt to the changing landscape, considering the interplay between supply and demand, as well as the impact of geopolitical events, which will continue to shape the oil market. With the EIA forecasting that global oil production growth will outpace demand over the next two years, oil prices may face downward pressure, while other commodity markets, such as wheat and food prices, also experience fluctuations, driven by factors like global demand, domestic output, and economic challenges, making it essential to stay informed and adapt to changing circumstances to capitalize on opportunities and mitigate risks.