Crude Oil Price Update – Traders Worried Hawkish Fed Minutes Will Hurt Demand

U.S. West Texas Intermediate crude oil futures are sharply lower on Wednesday on concerns that aggressive Fed rate hikes could trigger a recession that would weigh on fuel demand. These worries could be confirmed by today’s minutes from the U.S. Federal Reserve.

At 11:41 GMT, April WTI crude oil futures are trading $75.46, down $0.90 or -1.18%. On Tuesday, the United States Oil Fund ETF (USO) settled at $66.69, down $0.33 or -0.49%.

Hawkish Fed Minutes Could Strengthen US Dollar

Today’s Fed policy meeting minutes could offer some insight into how high policymakers may be willing to take interest rates in order to tame inflation. And while the Fed is working on driving down inflation with higher rates hikes, the U.S. Dollar is expected to rise. This would hurt foreign demand for dollar-denominated crude oil.

Mixed Outlook This Week

Traders are expecting this week’s inventories reports to show another rise in stockpiles, adding to the worries over demand. However, prices could be underpinned by expectations of tighter global supplies and rising demand from China as the country continues to recover from COVID restrictions.

Analysts now expect China’s oil imports to hit a record high in 2023 to meet increased demand for transportation fuel and as new refineries open for business.

Daily April WTI Crude Oil Technical Analysis

The main trend is down according to the daily swing chart. The downtrend resumed earlier today when sellers took out $75.32. A trade through $80.78 will change the main trend to up.

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

On the upside, the nearest resistance is a pair of 50% levels at $76.76 and $77.77. On the downside, the closest support is a main bottom at $72.64. The major support is a long-term 50% level at $69.79.

Daily April WTI Crude Oil Technical Forecast

Trader reaction to $76.36 is likely to determine the direction of the April WTI crude oil futures contract on Wednesday.

Bearish Scenario

A sustained move under $76.36 will indicate the presence of sellers. A trade through the intraday low at $74.95 will indicate the selling pressure is getting stronger. If this continues to generate enough downside momentum then look for the selling to possibly extend into the main bottom at $72.64 over the near-term.

Bullish Scenario

A sustained move over $76.36 will signal the presence of buyers. This is likely to lead to a labored rally with $76.79 and $77.77 potential resistance. Clearing $77.77 could trigger an acceleration into $79.76.