News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Crude Oil Price Tanks as Recession Fears Grow Ahead of Fed Chair Powell’s Testimony

Crude Oil Price Tanks as Recession Fears Grow Ahead of Fed Chair Powell’s Testimony

Daniel McCarthy, Strategist

Crude Oil, US Dollar, WTI, Brent, AUD, JPY, NZD, Fed, Powell - Talking Points

  • Crude oil prices slip lower on recession prospects with higher rates
  • APAC equities dipped and futures markets indicate a tough day for EU and US
  • All eyes on the Fed Chair’s testimony.Will an inflation fight push WTI lower?

Crude oil tumbled today as risk assets all came under pressure after yesterday’s relief rally.

There have been reports that US President Joe Biden is working on a plan for a gasoline tax holiday. This is ahead of Energy Secretary Jennifer Granholm’s meeting with oil refinery representatives on Thursday.

The WTI futures contract traded as low as US$ 105.00 today, while the Brent contract went to US$ 110.29 bbl. Both has recovered somewhat since.

Typical of a risk retreat environment, the high beta Aussie and Kiwi are the notable underperforming currencies. The US Dollar and Japanese Yen strengthened through the Asian session.

In emerging markets, the Philippine Peso fell to a 16-year low. Other EM Asian currencies were also lower to varying degrees against USD.

APAC equites are a sea of red, although Japanese stocks have held up ok while US futures are pointing to a negative start to their cash session.

In an online event, non-voting Richmond Federal Reserve President Thomas Barkin said, “the spirit is, you want to get back to where you want to go as fast as you can without breaking anything.

This was seen as being supportive of a jumbo hike at the July Federal Open Market Committee (FOMC) meeting. Such aggressive hikes by the Fed have sparked commentary on the likelihood or otherwise of a US recession.

The benchmark 10-year Treasury is steady near 3.26%. Gold is slightly lower on the back a firming USD, trading just under US$ 1,830 an ounce.

Later today, Fed Chair Jerome Powell will testify before Congress where it is anticipated that he will outlay the Fed’s strategy to tackle inflation.

There will be other central bank speakers to look out for, as well as Canadian CPI.

The full economic calendar can be viewed here.

Crude Oil (WTI) Technical Analysis

Crude oil is testing the lower bound of an ascending trend channel. Just below that line is the 100-day simple moving average (SMA) and slightly lower again is a previous low at 103.24.

A break below all of these potential support levels could see bearish momentum unfold.

Such a move would also be below the lower bound of the 21-day simple moving average (SMA) basedBollinger Band which could see volatility break out.

Topside resistance might be at the break points of 111.20 and 116.57.

CRUDE OIL CHART

Chart created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES