WTI declines near a two-week low below $85.00 as US CPI hogs limelight


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  • Oil prices have dropped to near a two-week low at $84.75 amid multiple headwinds.
  • Build-up of oil inventories, recovery in the DXY, and inflation risks to the US economy add volatility to oil prices.
  • IEA head slammed OPEC+ for oil supply cuts as it may worsen the developing nations’ situation.

West Texas Intermediate (WTI), futures on NYMEX, have plunged more than 3% to near two-week low at around $84.75 amid a build-up of oil inventories last week and rising odds for the higher peak of Federal Reserve (Fed)’s terminal rate. The oil prices nosedived after surrendering the psychological support of $90.00 as oil demand is facing multiple headwinds.

On Wednesday, US Energy Information Administration (EIA) reported a build-up of oil inventories by 3.925 million barrels for the week ending November 4. The addition of oil stockpiles weighed significant pressure on oil prices.

Apart from that, raising fears of an economic downturn in the US economy also dampens the market mood. Richmond Federal Reserve (Fed) President Thomas Barkin on Wednesday cited that Fed’s fight against inflation may lead to a downturn in the US economy, but that is a risk that the Fed will have to take, reported Reuters.

A sheer recovery in the US dollar index (DXY) also impacted the oil prices. The DXY recovered sharply as odds for higher Fed’s peak rate accelerated. Economists at ABN AMRO predicted that the Fed would shift its peak higher than the projected terminal rate to 5% (with a 25 bps rate hike in the first two monetary policies in CY2023 after a 50 bps rate hike in December). Going forward, a higher release of US inflation will strengthen the DXY and may escalate selling pressure for oil.

For OPEC+’s production cut decision, head of the International Energy Agency (IEA) Fatih Birol slammed the oil cartel’s decision to cut oil production as it might worsen the outlook for developing countries that are sliding towards recession, reported Bloomberg. He further added that the move is fueling inflation, especially in developing countries, and may require a “rethink,”

In China, a postponement in the reopening of the economy is also adding to the sell-side filters for the oil prices. Expectations of weak oil demand in the coming months due to a continuation of the no-tolerance Covid-19 approach are supporting oil bears.

WTI US OIL

Overview
Today last price 85.09
Today Daily Change -3.43
Today Daily Change % -3.87
Today daily open 88.52
 
Trends
Daily SMA20 86.77
Daily SMA50 85.6
Daily SMA100 90.88
Daily SMA200 97.47
 
Levels
Previous Daily High 91.4
Previous Daily Low 88.01
Previous Weekly High 92.09
Previous Weekly Low 84.78
Previous Monthly High 92.63
Previous Monthly Low 79.32
Daily Fibonacci 38.2% 89.3
Daily Fibonacci 61.8% 90.1
Daily Pivot Point S1 87.22
Daily Pivot Point S2 85.92
Daily Pivot Point S3 83.83
Daily Pivot Point R1 90.61
Daily Pivot Point R2 92.7
Daily Pivot Point R3 93.99

 

 

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