Oil continues to fall ahead of anticipated interest rate increases.
After falling 5% the previous session, oil prices continued to decline on Wednesday as investors worried about the state of the American economy in advance of the Federal Reserve’s anticipated interest rate hike later in the day.
By 11:05 GMT, Brent futures had decreased by $2.27, or 3%, to $73.05 per barrel, while West Texas Intermediate crude (WTI) had decreased by $2.28, or 3.1%, to $69.38.
In the previous session, both benchmarks experienced their largest one-day percentage falls since early January while closing at their lowest levels since late March.
As part of its ongoing fight against inflation, the Federal Reserve is anticipated to announce another quarter-point increase later today, according to PVM Oil analyst Stephen Brennock.
He continued, “Fears that the U.S. economy is hurtling towards a shallow recession did nothing to dispel concerns about the health of the U.S. banking sector and dismal U.S. jobs data.”
To battle inflation, the Fed is anticipated to increase interest rates by an additional 25 basis points on Wednesday. The European Central Bank is anticipated to do the same on Thursday during its regular policy meeting.
More increases could stifle economic expansion and lower energy demand.
Energy prices are also under pressure because of data from China released over the weekend showing an unexpected decline in manufacturing activity in April. The world’s greatest energy consumer and top crude oil purchaser is China.
The American Petroleum Institute reported on Tuesday that U.S. crude stockpiles dropped for a third week in a row for the first time since December, dropping about 3.9 million barrels last week.
BRENT CRUDE OIL TECHNICAL ANALYSIS DAILY CHART:
Brent Crude Oil is currently trading in down channel.
Brent Crude Oil is currently trading below all SMA.
RSI is in selling zone which suggests bearishness and Stochastic is suggesting downtrend.
Brent Crude Oil resistance is at 75.49 & its immediate support level is 73.98
HOW TO TRADE BRENT CRUDE OIL
As Brent Crude Oil was rising, it faced strong resistance at a certain level; as a result, the trend changed and it began to decline; it has since broken its previous day’s low and is currently trading in a zone of support; if this zone is broken, more fall is possible.