Crude Oil Price Update – API Report Expected to Show Another Inventories Rise

U.S. West Texas Intermediate crude oil futures are plunging late in the session on Wednesday with long investors spooked by recent economic data which suggests more aggressive rate hikes from the major central banks.

At 20:45 GMT, April WTI crude oil is at $73.91, down $2.45 or -3.21%. The United States Oil Fund ETF (USO) is at $64.97, down $1.72 or -2.58%.

Fed Rate Hikes a Threat to Fuel Demand

Meanwhile, the Fed meeting minutes, released at 19:00 GMT, offered nothing fresh to investors with policymakers stressing that their concern over inflation is high.

Inflation “remained well above” the Fed’s 2% target, the minutes stated. That came with labor markets that “remained very tight, contributing to continuing upward pressures on wages and prices.”

Federal Reserve officials at their most recent meeting indicated that there are signs inflation is coming down, but not enough to counter the need for more interest rate increases, meeting minutes released Wednesday showed.

All signs are pointing toward more rate hikes from the Fed with the market pricing in three rate hikes in March, May and June. This may be enough to contract the economy or force a recession, which would pressure economic growth and fuel demand.

American Petroleum Institute Inventories Report on Tap

According to a preliminary Reuters poll on Tuesday, analysts forecast a rise in U.S. crude inventories, feeding demand worries. The American Petroleum Institute (API), and industry group, releases its inventory report at 21:30 GMT.

Daily April WTI Crude Oil Technical Analysis

The main trend is down according to the daily swing chart. A trade through $72.64 will reaffirm the downtrend. A move through $80.78 will change the main trend to up.

The minor trend is also down. A trade through $79.76 will change the minor trend to up. This will also shift the momentum.

On the upside, resistance is a pair of 50% levels at $76.79 and $77.77. On the downside, the major support is a long-term 50% level at $69.79.

Daily April WTI Crude Oil Technical Forecast

The selling pressure is likely to continue late in the session on Wednesday if the API report shows a bigger rise in crude oil inventories than forecast. Traders are looking for a crude oil stockpile increase of about 2.9 million barrels.

There seems to be enough downside momentum to reach the main bottom at $72.64. This is the last major support before $69.79.