07 Jan 2025

West Texas Intermediate (WTI) US Crude Oil prices are experiencing difficulty in establishing a clear intraday trend on Tuesday, fluctuating within a limited trading range below the $73.00 mark during the early European session. Currently, the commodity appears to have halted its downward correction from the mid-$74.00s, which represents a nearly three-month peak reached on Monday, amid a backdrop of mixed fundamental indicators.

Concerns regarding subdued demand from China, the leading oil importer globally, alongside increasing supply from non-OPEC nations, are significant factors exerting downward pressure on crude oil prices. Additionally, global crude exports experienced a decline in 2024 for the first time since the onset of the COVID-19 pandemic. This situation, coupled with the anticipation of slower interest rate reductions by the Federal Reserve in 2025 potentially impacting fuel demand, contributes to the limitation of crude oil price increases.

Nevertheless, apprehensions surrounding tighter supplies from Russia and Iran, in light of expanding Western sanctions, have mitigated losses and are expected to provide ongoing support for crude oil prices, thereby restricting any substantial declines. Consequently, it is advisable to await a robust follow-through in selling before concluding that the recent positive trend observed over the past month has lost momentum, and before considering any further depreciation in the commodity.

Traders may also choose to remain cautious ahead of the upcoming release of the FOMC minutes and the highly anticipated US Nonfarm Payrolls (NFP) report, scheduled for Wednesday and Friday, respectively. These events are likely to significantly influence the short-term dynamics of the US Dollar (USD), which, in turn, will provide critical momentum for USD-denominated commodities and help ascertain the next directional movement for crude oil prices.