Oil outlook: Remains in red as hawkish Fed Minutes fueled demand concerns

WTI

WTI oil price remains in red for the fourth consecutive day and pressuring fresh three-month low ($76.42) posted in the previous session.

Near-term sentiment weakened after Fed’s minutes of the latest policy meeting showed that policymakers’ hope of further easing of inflationary pressures were partially offset by hints that the first rate cut could be delayed further, with signals that possibility of another rate hike is not completely off the table, adding to overall hawkish message.

Investors kept short positions, as hawkish signals from the US central bank would further harm demand prospects, with no significant positive impact on oil prices so far from rise of gasoline demand in the US, which hit the multi-month high.

However, economists remain cautiously optimistic on hopes that upcoming summer driving season will boost global demand growth.

Markets shift focus on June 1 OPEC+ meeting, in which the members will discuss whether to extend production cut of 2.2 million bpd.

Technical picture remains firmly bearish on daily chart, as completion of a double-top and a lower platform at $80.00 zone (psychological / 200DMA) weighs on near-term action, as the WTI contract is on track for a weekly loss of approx. 3.7% and weekly close below cracked 50% retracement of $67.70/$87.61 rally ($77.66) after a double failure, as well as formation of weekly bearish engulfing pattern.

Bears eye targets at $75.54/31 (200WMA / Fibo 61.8%), loss of which would generate fresh bearish signals.

Meanwhile, oversold conditions suggest that bears may take a breather in coming sessions and position for fresh push lower.

Broken Fibo 50% level reverted to initial resistance ($77.66) followed by converged 20/100DMA’s ($78.87) which should cap extended upticks.

Only sustained break above pivotal $80.00 resistance zone would be a game changer.

Res: 76.89; 77.66; 78.87; 80.00.
Sup: 76.10; 75.54; 75.31; 75.00.

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