Crude Oil stockpiles increase shock amid Fed. Last week’s surge in US crude stockpiles surprised predictions.

Crude oil caution on inventory data and US Fed

While investors wait for the US Fed to announce its March monetary policy decision later in the day. The crude oil markets are trading warily on Wed in Europe and other markets. On a more market-specific point, prices have been lowered due to an unexpected increase in US crude oil reserves.

In reaction to persistently high inflation. The Fed is anticipated to raise borrowing costs once more. Though it is unsure how much will be raised given recent banking stresses. Its pondering will be heavily influenced by the failure of two midsize US houses, which serves as an example.

The Fed Funds rate is expected to increase by one-quarter of a percentage point as a starting point. If it occurs, it would be the ninth meeting of the FOMC where interest rates have increased.

Crude oil’s future energy remains uncertain

Although oil prices have recovered significantly from their 15-month lows last week. The prognosis is grim due to worries about the two biggest economies in the world. And the ongoing conflict in Ukraine.

Bulls anticipate increased demand from China as the onerous and protracted Covid limitations loosen. The market has been somewhat restricted. However, the prospect of a downturn or even recession in the US economy would result in lower demand.

The data on the US oil stockpile may already show indications of this. The American Petroleum Institute reported that during the week that concluded on March 17. Inventories rose by 3.3 million barrels. The result was far better than predicted. Which called for a 1.6 million barrel decrease.

Financial woes still weigh on oil markets

It’s reasonable to expect that flow to continue. Although in a nervous market prone to abrupt reversals, should the Fed act as widely anticipated? Nevertheless, a noticeable decrease in market jitters over the banking industry. Resulting in a return of money to growth-linked assets such as oil.

Technical Perspective

Given the speed and severity of those drops. It is not surprising that prices have fallen significantly under the 20-, 50-, and 100-day moving averages. However, given the absence of market-specific shocks, prices should soon begin to correct themselves.

The bulls’ first task is likely to retake and hold significant psychological opposition at $71.00. If this level is chosen. It will be instructive to observe how it performs on a daily or weekly closing basis in the near term. The $75 mark may serve as the market’s goal to get back on track if it can restart its larger uptrend. Support is located nearby at $67.18, which was the day’s ending low on March 15.

Daily Indicators

Crude Oil WTI