Crude witnessed more than 3.15% drastic fall today. That is biggest fall since 3 February 2023. MCX oil Prices went down below 6295 levels, pressured by concerns of more U.S. Federal Reserve interest rate hikes that could weigh on demand, and signs of ample supply.
Two Fed officials on Thursday warned additional hikes in borrowing costs are essential to lower inflation to desired levels. Heightened rate hike expectations boosted the U.S. dollar, making oil more expensive for holders of other currencies.
Brent crude futures down by 2.50% trading at $82.49 a barrel by 0901 GM. WTI U.S. crude fell 2.34% to $76.16. Both benchmarks were heading for a weekly decline of more than 3%.
Adding to this, various signs of ample supply also weighed on the market. The latest snapshot of U.S. supplies, released on Wednesday, showed crude inventories in the week to Feb. 10 rose by 16.3 million barrels to 471.4 million barrels, their highest level since June 2021.
Moreover, IEA and OPEC+ to raise their forecasts for global oil demand growth this year. Which also citing expectations for more Chinese demand.
U.S. producer price index inflation read higher than expected for January, coming on the heels of a red-hot consumer price index report that indicated that inflation will likely remain stubborn in the world’s largest economy, also weighted on sentiment.
Technical View – Crude oil may break next support 6255 very soon
CRUDE oil retreated from 6550-6540 as per outook which released on 14 February 2023. It retreated from 6550-6540, recently it tested low 6290. Predicted target was 6420-6350.
Intraday price action resulted in formation of long bearish candlestick which is creating a probability for bearish momentum to continue. Next crucial support seen at 6255. A break below Crude oil prices may test 6180-6120 very soon . Revise stop loss will be at 6388.0
Furthermore, RSI 14 and its 9 SMA also giving negative cross over which also supports the recent trend.
Alternatively, on the upside immediate resistance is seen at 6395. A break above will create a probability for short covering. Crude oil prices may retest 6480-6580 on upsides.