WTI crude price fell 2.4% on Friday and is heading for an almost 5% weekly drop as recent solid US economic data reinforced views that the Fed would keep interest rates higher for longer. This in turn weighs on risky assets. EURUSD pair fell below major support at 1.0630, while European indices pulled back sharply from recent record highs.
While inflation does appear to be easing, there are fears that the path lower will not be smooth and inflation may not be cooling fast enough for the Fed’s liking. At the same time robust US economic data fanned concerns that the US central bank will raise interest rate hikes that could weigh on oil demand at a time when inventories continue to rise. The latest EIA report showed that US crude inventories increased by 16.283 million barrels to 842.973 million last week, the highest level since early October. At the same time, prices have also been under pressure after the US government announced plans to release 26 million barrels of oil from strategic reserves. IEA and OPEC raised their forecast for 2023 oil demand growth, citing higher consumption from China, however this did not provide more help for oil bulls.
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OIL.WTI - during the Asian session price broke below major support at $77.80, which is marked with previous price reactions. Currently price is approaching crucial support at $76.10, which coincides with 78.6% Fibonacci retracement of the upward wav started in December 2021 and lower limit of local descending channel. Should break lower occur, downward move may deepen towards recent lows at $72.50. Source: xStation5
