As WTI waits for the US inflation report, crude oil prices ignore tensions between Russia and Ukraine.

Oct 11, 2022
VOT Research Desk

Market Insights & Analysis

On Monday, WTI crude oil prices fell 2.5% along with Wall Street.

The slowdown in global economy was the main concern, rather than the problems in Russia and Ukraine.

Prior to Thursday’s release of the US CPI statistics, geopolitics is still an unknown.

On Monday, WTI crude oil prices experienced their worst single-day performance since September 26.Despite the impressive rally of almost 17% last week, this is the case. The latter was sparked by OPEC+’s plans to reduce output in the coming months in light of the drop in energy prices since the beginning of the year, allowing for reduced supply.

To begin the new trading week, growth-linked crude oil was focusing on concerns regarding global GDP. Lael Brainard, Vice Chair of the Federal Reserve, spoke and reiterated the central bank’s efforts to combat the 40-year high in inflation. She also mentioned the dangers of easing too quickly, citing the Fed’s 1970s actions. Charles Evans, president of the Chicago Fed, also spoke, and he delivered a similar message.

The commodity that is linked to sentiment was also falling on Wall Street. Concerns about a global recession continued to be raised by hawkish Fed commentary, particularly in light of the positive jobs report from last week. The plans from the White House to continue restricting China’s access to US technology caused the tech-heavy Nasdaq100 to drop by more than one percent.

Additionally, it appeared that the escalating tensions between Russia and Ukraine did little to raise crude oil prices. Bloomberg claims that the “most intense barrage since the first days of the invasion” was the result of Russia’s most recent missile attacks on Kyiv. Earlier this week, Ukraine was accused by Russian President Vladimir Putin of blowing up a crucial bridge connecting Crimea and Russia.

As WTI waits for the US inflation report on Thursday, geopolitics remain a risk for the commodity. From 8.3% in August, headline CPI is expected to rise to 8.1% y/y in September. The core reading is expected to rise from 6.3% to 6.5 percent annually. The Federal Reserve does not want the latter. Crude oil prices could be impacted by yet another data upside surprise. Financial market volatility could easily increase

Analytics

Over the previous 24 hours, WTI crude oil prices have retreated to the inflection point of 90.37. The 38.2% Fibonacci retracement, located at 94.37, continues to serve as immediate resistance. Prices are also above both the short-term rising support line from late September and the 50-day Simple Moving Average (SMA). A breakout under the latter two may signal the start of a new downturn. Otherwise, 97.65 is the high point for August.

Crude Oil WTI  (Daily)