Selling Pressure in Crude Oil As It Keeps Making Lower Highs, USD Pushes Up
Crude Oil continues to trade back and forth in a range, with the support above $70 while the top side resistance comes above $80, although right now we’re in the middle of a bearish move, after the latest rejection above that major level earlier this month.
We saw some bullish momentum in January as the sentiment improved on China reopening after three years of coronavirus lockdowns, which should increase the demand for Oil. The USD was also retreating, which left added further to the bullish momentum in crude Oil.
WTI Oil Daily Chart – The 100 SMA Pushes the Trend Down
US Oil continues to remain in a bearish trend
But, the USD decline has come to an end and the sentiment is turning negative as the FED is turning hawkish once again, on an economic bounce in the USD, while the cool-of in inflation has lost momentum. The 100 SMA (green) which has been acting as resistance since November last year, stopped the bullish momentum as it rejected the price and sellers resumed control.
Yesterday the decline started to pick up pace, especially after the FOMC minutes from the last FED meeting, when they delivered a 25 basis points rate hike. Some members pushed for a 50 bps hike, which is bullish for the USD and bearish for risk assets in general. So, we are heading for the bottom of the range.
The global economy is improving, especially the US economy which is showing a decent bounce, although services are improving everywhere. But, if central banks continue with rate hikes, we might head into a larger recession later in the year, which means lower demand for Oil, ignoring the fact that recently OPEC had cut production by 2 million barrels a day.
So, the pressure is on the downside for now, although it remains to be seen if the $70 level will be broken. Yesterday we saw a much larger than expected build up in API numbers, so today the EIA numbers should be larger as well.
US WTI Crude Oil Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals