USO oil price pierced through the crucial resistance zone of $80 on Wednesday before pulling back slightly on Thursday. The exchange-traded security, which tracks the performance of light sweet crude oil, has been in consolidation mode for close to a month before the breakout on Tuesday.
Geopolitics revolving around Trump’s fresh tariff threats hint at heightened market volatility in the near term. While the fundamentals remain healthy, with a bullish demand outlook and tightening global supply, the market participants remain cautious. In the ensuing sessions, investors will be seeking clarity on Russia sanctions and tariffs on its trade partners.
Trump’s new tariff threats steers oil market volatility
After close to a month of range-bound trading, USO oil ETF has recorded a breakout past the crucial resistance zone of $80. This is as the market weighs Trump’s latest tariff threats and their possible impact on crude oil supply.
The US President has warned that he will impose harsh measures on Russia if it does not move to end its war with Ukraine within 10-12 days. This includes enacting 100% secondary tariffs on the country’s trading partners. Notably, the stipulated timeframe is a move up from the previous deadline of 50 days.
On the one hand, the fresh tariff threats have market participants wary over the impact on crude oil supply. However, based on past events, traders appear hesitant to price in the new tariffs. Indeed, President Trump has a history of announcing trade policies, only to change them after a short while. As such, the market will be seeking clarity on the details of the new levies and the possible enactment of sanctions on Russia.
Meanwhile, EIA’s weekly inventory report showed a surprise build as imports and domestic production rose while exports dropped. US crude oil stockpiles increased by 7.7 million barrels for the week ending on July 25th compared to the forecast draw of 1.3 million barrels.
However, the surprise build was offset by the lower-than-expected gasoline inventories, which supported the sentiment of a strong summer driving season. Besides, the US GDP growth of 3% year-on-year in Q2’25 points to the economy’s resilience.
USO ETF price technical analysis
USO ETF price chart | Source: TradingView
USO crude oil price extended gains from the previous session to trade above $80 for the first time in five weeks. Notably, the exchange-traded security has been range-bound since the beginning of July. However, Wednesday’s gains had it break the crucial resistance zone of 77.50 after trading below it since late June.
A look at its daily price chart shows USO price trading above the short-term 25-day EMA. This bullish indicator, coupled with the positive signal from an RSI of 67, points to steady support in the ensuing sessions.
In the immediate term, USO oil price will likely experience resistance at $81.85. This may yield range-bound trading with $78.29 being a support level worth watching. However, with additional bullish support, the asset may reach the upper resistance level of $82.93 as the bulls seek to retest the 5-month high reached in June.
On the flipside, a decline past the current range will have the bears eyeing the support level along the 25-day EMA at 76.12.
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