Oil prices, which spiked initially on Monday, have since seen losses due to traders’ reaction to threats of severe tariffs against Russia. Despite still holding above $65 a barrel, the outlook remains bearish, with expectations of sideways movement. WTI is now below key support levels, indicating a bearish trend in the short term.

President Trump’s threats of severe tariffs on Russia have not significantly impacted oil prices, as investors remain skeptical of his follow-through. Concerns over secondary sanctions on countries buying Russian oil have somewhat eased, with a focus on OPEC’s decision to increase supplies. The market is also digesting Trump’s tariff threats and their potential impact on the oil market.

Oil prices have been supported by easing trade tensions and seasonal demand dynamics, with a surge in equities market and central banks cutting rates. US peak driving season is expected to boost gasoline consumption. Despite OPEC+ increasing production, US output growth has stalled, giving the group an opportunity to maintain market share. However, increased production may weigh on prices post-driving season.

OPEC+ has announced a production hike for August, aiming to maintain market share amid stalled US output growth. Softening oil prices have impacted drilling activity, leading to a downward revision in US oil production forecasts. OPEC+ may be capitalizing on the current market conditions to restore barrels to the market, potentially impacting prices post-driving season. The outlook for oil prices remains uncertain amidst these developments.

Read more at Investing.com: Crude Oil Correction Could Deepen as Market Shrugs Off Trump’s Tariff Threats