- Oil price is expected to find acceptance below $70.00 as US debt-ceiling issues are escalating.
- The US Treasury will be out of funds for making obligated payments on the failure of raising the US debt ceiling.
- A recovery move by the oil price to near $71.75 has retreated as support became resistance for the oil bulls.
West Texas Intermediate (WTI), futures on NYMEX, are showing quite a sideways performance around $70.00 in the Asian session. The oil price is continuously facing selling pressure as a delay in negotiations over the United States borrowing cap limit has deepened fears of a recession in the economy.
The street is worried as if the White House and top Republican leaders fail to reach a decisive action, the US Treasury will be out of funds for making obligated payments on the failure of increasing US debt-ceiling, which will result in a huge loss of production scale and millions of jobs.
Meanwhile, oil prices have failed to capitalize on rising odds of a pause in the policy-tightening spell by the Federal Reserve (Fed). The US Dollar Index (DXY) has refreshed its monthly high above 102.73.
Oil prices witnessed a sell-off after a breakdown of the Ascending Triangle chart pattern formed on an hourly scale. A recovery move by the oil price to near $71.75 has retreated as support became resistance for the oil bulls.
The 50-period Exponential Moving Average (EMA) at $71.13 is acting as a barricade for the oil bulls.
Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the bearish range of 20.00-40.00, signaling more weakness ahead.
A further breakdown below May 12 low at $69.94 will expose the asset to May 03 low at $97.92. A slippage below the latter will expose the asset to May 04 low at $63.60.
On the flip side, a solid recovery above May 10 high at $73.80 will allow the asset for further upside towards May 02 high at $76.06. A breach of the latter will expose the asset to April 26 high around $78.00.
WTI hourly chart
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