WTI plunges as traders brace for higher US interest rates
|- WTI drops more than 4% or more than $3.00 pb on Tuesday.
- Powell opened the door for faster rate hikes and higher terminal rates.
- China’s reopening put a lid on WTI’s fall, at around the 20-day EMA at $77.21.
Western Texas Intermediate (WTI) collapsed 4% on Tuesday, following hawkish remarks by the US Federal Reserve (Fed) Chair Jerome Powell at an appearance in the US Senate. The US Dollar (USD) rose, and US Treasury bond yields, mainly 2s, reached the 5% threshold. At the time of typing, WTI is exchanging hands at $77.17 PB.
WTI dropped on Fed Powell’s remarks, though it was capped by future demand
Jerome Powell, the Federal Reserve Chair, said the Fed needs to increase rates above previous forecasts. Powell added that the US central bank would be ready to hike rates in large increments if upcoming data was solid.
The US Dollar Index (DXY), a gauge for the buck’s value vs. six currencies, advances more than 1%, at 105.597, a headwind for the US Dollar denominated commodity.
Oil prices tumbled earlier on China’s data, with Exports shrinking 6.8% YoY, lower than the previous reading. Imports were 10.2% weaker, worst than December figures at 7.5%, less than a year earlier.
However, WTI’s fall was capped by speculations of an oil shortage. According to the US Energy Information Administration (EIA), US crude production and demand will increase in 2023 as Chinese travel drives consumption.
WIT Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.