Crude oil maintains pressure as fears of a recession grow. WTI recently experienced its worst week since February 2020, falling 13.55%.

Crude Oil fundamental perspective

This morning, there was increased selling pressure on crude oil as recession threats made a comeback. WTI hit a low of $64.40 during the European trading period. But a rebound in risky assets propelled oil higher. Where it is currently trading at around the $67.00 handle.

Crude oil rates dropped by 13.55% the prior week, the most since Feb 2020. A manifestation of the fear that gripped markets last week as a result of the ongoing banking fallout.

Crude oil faces gloom of recession fears

The decrease this morning served as yet another indicator of the looming gloom surrounding possible demand worries. Adding to recessionary risks.

The main Central Banks (SNB, BoC, BoE, BoJ, and ECB) would take coordinated steps to boost the offering liquidity via the standing US dollar liquidity swap steps. According to a statement made by the Federal Reserve on Sunday.

OPEC perception in view

Prince Abdulaziz bin Salman, the Saudi Arabian energy minister, spoke last week about the G7 price cap on Russian oil and less global oil  He emphasized the importance of adhering to the OPEC resolution to reduce production by 2 million bpd until the end of 2023. Which was made in October 2022.  Yet, given the recent drop in prices, conjecture about how low OPEC wants oil prices to fall before intervening

The fact that oil prices are presently hovering just under the range that the US initially set aside to restock the SPR, between April 1 and June 30. The SPR in the US is anticipated to continue falling as long as rates are still beneficial for replenishing reserves. According to remarks made by US Energy Envoy Hochstein on Friday, President Biden adheres to restocking the SPR, which could theoretically drive up oil costs.

UPDATE ON BRENT CRUDE

Bent Prices have been moving in the same direction as WTI this week as it approached the psychological $70 per barrel, which coincided with the 200-day MA.

The $70 per barrel barrier will continue to be important if we are to see further downward, with a daily candle finish under opening up likely support tests of the $65.60 and $62.60 zone.  If we are to see a long-lasting rebound going forward, resistance at the $75.30 handle on the upside will be crucial.

TECHNICAL PERSPECTIVE

WTI printed a new multi-year bottom this morning after breaking the 2022 lows last week from a technical standpoint. On Thursday of last week, we witnessed a doji daily candle closure. Which suggested that oil prices might rise above the $68 per barrel level. Any such expectations, however, were dashed on Friday when market pessimism returned, And WTI ended the week just over the $65 per barrel threshold.

The end of today’s daily candle will be intriguing because the RSI is currently oversold as well. Any further steps, though, are probably contingent on the current state of the general mood improving.

Source: TradingView