- WTI bulls could be about to take action after the strong move lower.
- Concern over the US Recession is affecting financial markets and creating a state of risk aversion.
West Texas Intermediate crude It is down over 4% so far today, slipping back into downtrend and in front of what was momentarily a countertrend line. At the time of writing, WTI is trading at $73.80, near the daily lows, having fallen from $77.86.
Recession concerns have resurfaced in financial markets, where investors are risk-averse after the release of the first data of the week in the US, which fueled the hard-line discourse of the Federal Reserve. On Monday, the Institute for Supply Management (ISM) announced that its non-manufacturing PMI had risen to 56.5 last month, from 54.4 in October, indicating that the service sector, which accounts for more than two-thirds of economic activity in The US continued to resist the rise in interest rates. The data beat forecasts for a drop in the non-manufacturing PMI to 53.1 points.
Concerns about a sharp rise in borrowing costs have boosted the dollar this year, putting negative pressure on the Stock and Bond markets, with the S&P 500 down 17.5%.
For its part, the Energy Information Administration (EIA) raised its forecast for global oil inventories to 2023 in its December publication, the Short-Term Energy Outlook (STEO), increasing its forecast by 0.2 million barrels after expecting a drop of 0.3 million barrels in its November publication. The EIA also cut its forecast for the average price of Brent crude oil next year to $92.00, below its November estimate of $95.00, on expectations of a US recession.
Meanwhile, the agency took into account the European Union’s ban on importing Russian oil by sea and the $60 cap on Russian crude prices that came into effect earlier this week following the decision taken on Friday. The cap is expected to constrain supply as Russia searches for alternative buyers.
WTI Technical Analysis
APrevious analysiswhich favored the market up as long as the price held to the back of the counter-trend line, recognized a break below $76.40 that would be putting committed bulls in serious trouble according to the following daily and trading charts. 4 hours:
In the meantime, there are prospects for a correction at this juncture:
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
