WTI Crude Oil breaks above $65 after the Fed, at 6-week highs

The prcie of the benchmark West Texas Intermediate are extending the move to the upside, trading around $65.40, the highest levels since February 2nd, a new 6-week high. The recent driver was the decision of the Federal Reserve.

Fed decision and oil prices

The Fed increased the interest rate to a maximum of 1.7% as broadly expected by the markets. The central bank released new forecasts for growth, inflation, employment, and interest rates. The guidance for rates in 2018 was left unchanged at a total of three hikes while they did upgrade the forecasts for 2019 and 2020. 

Later on, Fed Chair Jerome Powell expressed confidence in the eonomy but also downplayed the importance of the guidance. On the other hand, the Fed Chair said he was surprised that wages are not rising and said that holding press conferences after every rate decision should be considered carefully as he did not want to send any signals to markets. 

The US Dollar reacted in an adverse manner to both events, falling against other curencies. Commodities reacted positively to the news, with oil prices extending their gains. The inverse correlation between the US Dollar and the price of oil was in play.

WTI Crude oil had begun its upswing earlier. The EIA reported that crude oil supplies fell by 2.622 million barrles, contrary to a buld in inventories that was expected. Other indicators such as Gasoline and Distillates also saw drardowns. 

WTI Crude Oil levels

The high of $66.72 is the next significant barrier to watch after capping the pair on January 25th. The round level of $70.00 is next. 

On the downside, $64.23 was the February 26th high and is support. Further below, $62.77 is the 55-day SMA.