Oil falls ahead of Trump's inauguration. Are there more losses to come?

Oil falls ahead of Trump’s inauguration.

Nerves are showing after a 10% rally in recent weeks
The executive orders Trump signs will be watched closely
Trade tariffs on China could pull oil lower
Oil breaks below 75.00

Oil prices are falling after a solid run-up over the past few weeks, as attention turns to Trump’s inauguration and expectations surrounding his policies. Oil has rallied 10% in recent weeks reaching a peak of 80.77, a multi-month high last week on supply worries after Russian oil sanctions and following solid Chinese GDP data.

Trump’s inauguration is on Monday at 5:00 PM GMT, where he is expected to make policy announcements that will set the tone for his second term.

There is significant uncertainty across the market regarding what policies and executive orders Trump could sign immediately. Given the oil markets' 10% run-up in recent weeks, some profit taking is to be expected. Reports that Trump could relax curbs on Russia's energy sector in exchange for a deal to end the Ukraine war or that he will end a moratorium on US liquified natural gas export license have also weighed on oil prices.

Across his term, Trump is also expected to boost drilling permissions within the US. However, he could also implement stricter bans on Iranian oil, which would increase oil prices.

Meanwhile, the oil market will also closely monitor Trump's actions regarding tariffs on China, given that China is the world's largest oil importer. China is already implementing measures to boost economic activity, helping its GDP reach Beijing’s 5% growth target last year.

Should aggressive trade tariffs be applied, the oil market could fall on a weaker demand outlook.

Separately, oil is also seeing its risk premium fade amid easing tensions in the Middle East after Israel and Hamas exchanged hostages and prisoners amid a ceasefire.

Oil forecast – technical analysis

Oil rebounded lower from the 80.75 high reached last week, falling below the 75 support zone and the falling trendline towards the 200 SMA.

The bearish engulfing candle combined with the break below the support zone and bearish cross over on the MACD keep sellers hopeful of further declines towards 75.00 the 200 SMA and the round number. Below here sellers could gain traction.

On the upside, buyers would need to rise back above the 75.00 resistance zone to test 80.00 and clear the way to a higher high.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.