• WTI bulls hold off as US dollar rises post-Fed.
  • EIA report showed a big drop in US oil inventories.

At the time of writing, West Texas Intermediate (WTI) crude oil is trading at $71.96 in a tight post-Fed volatility day range of between $71.89 and $71.99. 

The markets were in the risk-on mood on Wednesday, that was before the Federal Reserve tightened the screw on financial markets in a hawkish outcome of the Federal Open Market Committee's two-day meeting. 

Prior to the Fed's statement and chair's presser, WTI CFDs on a spot basis were rising from the $71.30s to a high of $72.20. There was a knee-jerk bid to the highs of the day at $72.28 before the price dropped to test $71.80 support. 

Evergrande risk fades, for now

Initially, the markets seemed to be cheering news that Evergrande was not going to blow over into a global financial debt crisis and instead remain isolated to local markets and dealt with without hugely negative and widespread ramifications. However, the situation is fluid and highly uncertain. 

The Chinese central bank, PBoC, also injected cash into the banking system, temporarily soothing fears of imminent contagion from the debt-laden property developer. However, $300 billion in liabilities is owed to countless banks, lenders, retail investors and suppliers. This means any impact would be complex and uncertain. There has been no mention of its plans for another bond payment on Thursday and one next week. 

US dollar perks up on Fed

Meanwhile, the US dollar was finally attractive to investors when the volatility died down and markets came into line with a more hawkish tilt at the Fed. November has been marked as the most likely month for which tapering will begin. There is even a 50% chance that a rate hike might come sooner than expected in 2022. 

''Half of Fed policymakers see lift-off in fed funds rate from zero in 2022, vs. 7 of 18 in June forecast; all but one see liftoff by end-2023 (vs. 13 in June)."

Meanwhile, on Wednesday a report showed a big drop in US oil inventories. The Energy Information Administration reported US oil inventories fell by 3.5-million barrels last week, more than the 3.1 million barrel draw expected, according to a Reuters poll, while gasoline inventories rose by 3.5-million barrels.

Longer-term, as the markets wild card, nuclear talks are set to resume in the next few weeks. This will yet again raise questions as to whether Iranian crude would return to markets.

WTI

Overview
Today last price 71.89
Today Daily Change 1.11
Today Daily Change % 1.57
Today daily open 70.78
 
Trends
Daily SMA20 69.5
Daily SMA50 69.13
Daily SMA100 69.25
Daily SMA200 63.39
 
Levels
Previous Daily High 71.42
Previous Daily Low 69.35
Previous Weekly High 72.88
Previous Weekly Low 69.3
Previous Monthly High 73.54
Previous Monthly Low 61.73
Daily Fibonacci 38.2% 70.63
Daily Fibonacci 61.8% 70.14
Daily Pivot Point S1 69.62
Daily Pivot Point S2 68.45
Daily Pivot Point S3 67.55
Daily Pivot Point R1 71.68
Daily Pivot Point R2 72.58
Daily Pivot Point R3 73.74

 

 

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