- Summary:
- Crude oil prices have been rising for the past four sessions, but announcements by the Fed, OPEC and EIA, have interrupted the momentum.
Crude oil prices dropped of Tuesday as the market waited for the key US economic announcements. Brent crude oil price was at $81.49 per barrel, down by 0.50 percent in the intraday session. WTI followed a similar trajectory, declining by 0.26 percent to trade at $77.54 per barrel. The commodity has been on the upward trajectory in the last four trading sessions, and the current interruption could be limited, as many analysts expect increased demand during the summer.
The Federal Reserve will announce its interest rate decision on Wednesday, which could have long-term effects on crude oil prices. Barring a major surprise, the Fed is expected to retain the current 5.25-5.50 rate. However, that could also dampen the business environment in the United States, resulting in lower consumption of oil.
Oil could also feel the pressure from the geopolitical front if Israel and Hamas agree on a new ceasefire plan backed by the UN Security Council. Goldman Sachs had for a long time placed a $2 per barrel risk premium on oil as a result of the Middle East conflict, and a ceasefire deal could shave off the price.
Meanwhile, OPEC stuck to its 2024 global oil demand forecast in its latest monthly report. The oil cartel says that demand will rise by 2.25 million barrels per day (bpd) this year. Traders will now shift focus to the Energy Information Agency (EIA) short-term outlook report for more cues. Also, the American Petroleum Institute and EIA inventory data releases are lined up, and will inject fresh volatility into the market in the next 24 hours.
Technical analysis
Brent crude oil prices will likely pivot at 81.71, and the downside will likely prevail if resistance remains at that mark. The first support will likely be at 81.36, beyond which the downward action could proceed to test 81.06. Conversely, a move above 81.71 will favour the buyers to take control. The upward motion could, however, encounter another resistance at 82.10. A breach above that mark will invalidate the downside narrative and potentially propel more gains to test 82.50.
