- The rise in oil prices was due to the U.S. Federal Reserve’s expected small rate hike and announcement to pause future increases.
- The U.S. benchmark reached its highest closing since March 14.
- Despite a 1.1 million barrel increase in crude stockpiles, the oil markets remained unaffected.
- Gasoline and distillate inventories decreased more than anticipated.
U.S. West Texas Intermediate crude oil futures are edging lower early Thursday in a quiet trade after posting its third consecutive higher close the previous session.
At 02:35 GMT, June WTI crude oil futures are trading $70.25, down $0.77 or -1.08%. On Wednesday, the United States Oil Fund ETF (USO) settled at $61.59, up $0.36 or +0.59%.
Oil Prices Reach One-Week High as Fed Signals Pause in Future Rate Hikes
Oil prices increased by about 2% to reach a one-week high on Wednesday due to the U.S. Federal Reserve’s expected small rate hike, coupled with their announcement to pause future increases.
The U.S. benchmark reached its highest closing since March 14. The Fed’s decision to raise interest rates by a quarter of a percentage point was accompanied by language that prompted an increase in risk appetite, which spilled over into the oil market. The U.S. dollar also fell to a six-week low, making crude cheaper for buyers using other currencies and supporting oil demand.
Oil Markets Unfazed by Increase in US Crude Stockpiles
Despite a 1.1 million barrel increase in crude stockpiles last week to a 22-month high, the oil markets remained unaffected.
The EIA’s official data showed a smaller build than the 3.3 million barrel increase reported by the API. The rise in U.S. crude stockpiles since December has resulted in inventories reaching their highest levels since May 2021.
However, gasoline and distillate inventories decreased more than anticipated. Experts suggest that the surplus crude oil in storage is unlikely to disappear anytime soon.
Daily June WTI Crude Oil Technical Analysis
The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $64.58 will reaffirm the downtrend. A move through $80.97 will change the main trend to up.
The minor trend is up. It turned up on Wednesday when buyers took out $69.94. This shifted momentum to the upside.
The short-term range is $80.97 to $64.58. The market is currently testing its 50% level at $71.08.
The nearest support is a pair of 50% levels at $68.76 and $64.58. The closest resistance is a pair of Fibonacci levels at $73.05 and $74.71.
Daily June WTI Crude Oil Technical Forecast
Trader reaction to the pivot at $71.08 is likely to determine the direction of the June WTI crude oil futures contract on Thursday.
A sustained move over $71.08 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $73.05, followed by $74.71.
A sustained move under $71.08 will signal the presence of sellers. This could trigger a pullback into a pair of 50% levels at $68.76 and $68.01. The latter is a potential trigger point for an acceleration to the downside with $64.58 the next target.For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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