Oil Price Fundamental Daily Forecast – Recession Fears Offset Lower Yields, US Dollar

U.S. West Texas Intermediate crude oil futures are under pressure late in the session on Thursday as recession fears offset a drop in Treasury yields and the U.S. Dollar.

Recession worries escalated after the government reported a big jump in weekly unemployment claims. However, the news dampened the chances that the Federal Reserve would not speed up the pace of its interest rate hikes.

At 20:13 GMT, June WTI Crude Oil is trading at $75.73, down $1.12 or -1.46%. The United States Oil Fund ETF (USO) settled at $66.26, up $0.84 or -1.25%.

The Fed has been raising interest rates for nearly a year to reduce inflation to its mandated 2% level. But those rate hikes also increase consumer borrowing costs, which can slow the economy, cause a recession and reduce demand for oil in the future.

Weekly Jobless Claims Rise

The number of Americans filing new claims for unemployment benefits increased by the most in five months last week, but the underlying trend remained consistent with a tight labor market.

Initial claims for state unemployment benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4. That was the most significant increase since October, lifting claims to a two-month high. Still, claims remained well below the 300,000 level associated with a recession.

Economists polled by Reuters had forecast 195,000 claims for the latest week. The four-week moving average for new claims, a better measure of labor market trends as it smooths out weekly fluctuations, climbed 4,000 to 197,000 last week.

Daily June WTI Crude Oil Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $74.17 will change the main trend to up. A move through $80.97 will signal a resumption of the uptrend.

The minor trend is also down. This confirmed the shift in momentum. A trade through $78.18 will change the minor trend to up.

On the upside, resistance is a series of retracement levels ranging from $76.71 to $78.83. On the downside, the first target is a main bottom at $74.17, followed by a support cluster at $73.05 – $73.03.

Daily June WTI Crude Oil Technical Forecast

Trader reaction to the Fibonacci level at $76.71 is likely to determine the direction of the June WTI crude oil futures contract into the close on Thursday.

Bearish Scenario

A sustained move under $76.71 will indicate the presence of sellers. If this continues to generate enough downside momentum then look for the selling to possibly extend into the main bottom at $74.17 over the near-term.

Bullish Scenario

A sustained move over $76.71 will signal the presence of buyers. This could lead to a labored rally with potential resistance layered at $77.52, $78.29 and $78.83.