Crude Oil, WTI, US Dollar, Fed, Powell, EIA, Stocks – Talking Points
- Crude oil It continues to recover going into the Thursday session
- The large drop in inventories provided some impetus for the gains
- if western Monetary policy Still tight, where does WTI demand consolidate from?
Trade Smart – Subscribe to the DailyFX newsletter
Receive timely and compelling market commentary from the DailyFX team
Subscribe to the newsletter
Crude oil price bounced off support levels overnight and consolidated in Thursday’s trading session as mitigating factors come into play.
Speaking at a meeting of the Central Bank of Portugal yesterday, Federal Reserve Chairman Jerome Powell made it clear that tightening monetary conditions are in place for the foreseeable future.
He said, “Although the policy is restrictive, it may not be restrictive enough and it hasn’t been restrictive long enough.”
This sentiment was echoed by ECB President Christine Lagarde and BoE Governor Andrew Bailey as inflation remains consistently high across those economies.
From a macroeconomic perspective, the need to suppress demand to curb price pressures has been a headwind for crude oil for some time and doesn’t like to ease up anytime soon.
A potential source of growth may emerge from China, but the world’s second-largest economy has struggled to gain traction since rolling back pandemic restrictions.
Overnight data from the Energy Information Agency (EIA) showed that US inventories fell by 9.603 million barrels in the week ending June 23rd. This was significantly larger than the expected drop of 1.757 million barrels.
In the aftermath, prices have rebounded and the range trading environment seems unchanged for the time being. Updated crude oil prices can be found here.
Recommended by Daniel McCarthy
How to trade oil
Technical analysis of WTI Crude Oil
WTI continues to range trading conditions with the price contained in the range of 66.80 – 75.06 for more than 9 weeks. On a broader scale, it has been trading between 63.64 and 83.53 for a period of seven months.
With this in mind, the previous highs and lows may provide resistance and support, respectively.
On the downside, support might lie at 67.03, 66.82, 66.80, 64.36 and 63.64 or at the November 2021 low of 62.43.
On the upside, resistance could be at 73.28, 75.06, 76.92 and 79.18 before a group of breakouts and previous tops in the 82.50-83.50 area.
– By Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @tweet on Twitter