The prices of crude oil are continuously tumbling down for the past two weeks. Furthermore, yesterday the inflation index rose to 1.3 percent which is endlessly creating pressure on the prices of bullion and base metals.
The dollar index is at its 20-year high whereas the US inflation index is at its 40-year high. Therefore, fears of inflation are growing day by day thereby strengthening the dollar. Consequently, heading the crude oil prices toward the bearish zone.
Due to the hike in inflation rates, we are expecting that FED will raise interest rates by 0.75 BPS. As a result, the economy may face threats of recession in the near future. days.
Sources reveal that the US is forming a cartel against Russia. Moreover, a certain price cap should be maintained for crude oil prices. Precisely, the consumers seeking oil from Russia will not pay more than the specified amount decided by the cartel.
For now, India and China are out of this cartel formation. However, India said that Russia is exporting oil to our country with a 30 percent discounted amount. So, we will be importing crude oil from Russia only. Rest all depends upon the situation.
OPEC expects that there may be an increase in the demand for oil by 2.7 percent in the year 2023. Furthermore, in their monthly report the OPEC releases that in the coming year, the demand for crude oil may rise by 2.7 million barrels a day. In their report, OPEC says that strong global growth may steadily increase the consumption of oil.
Moving towards the technical side, Crude oil is forming a triangle pattern which itself signifies a both-side breakout. A weak trend in crude oil still persists.
No doubt, yesterday we experienced high volatility in crude oil prices. Both side movements were visible in yesterday’s trading session.
Crude oil has a major support of 7350—7200 levels. Moreover, we are expecting to touch the support level soon.
Traders who are sitting on buying side may maintain a stop loss of below 7550 on the closing basis. The major resistance of crude oil is 7850. If breaches the level, then we may see an upside rally.
In a nutshell, the trend of crude oil is still negative and there are higher chances of downside panic in the next couple of days.