Crude Oil Hesitating at the 200 SMA, As Economic Uncertainties Increase

The market was worried about the FED continuing rate hikes until yesterday, but now it has grown concerns about a potential recession and a hard landing, while OPEC countries and Russia unexpectedly cut their output. Today’s weekly inventory data was also tight, with oil, gasoline, and diesel stockpiles all drawing down. As a result, the market has been trading sideways for three days, unable to break the top of the recent range but also facing supply shortages that prevent it from going down.

If a recession were to occur and the FED were slow to respond, the risks to the downside would increase, particularly if it spreads globally. However, it appears that there is an OPEC put at $70, which serves as a cushion.

Moving forward, the market will likely continue to follow economic data, but it seems to be shifting toward a paradigm where the burden of proof will be on the data to prove that the economy is doing well, and the assumption will be a recession. This may make it challenging for oil to climb from its current level.