Crude oil prices slumped on Wednesday, with the U.S. and the U.K. benchmarks losing more than 4% amid growing global recession fears. Prices managed to stabilize on Thursday but remain on the defensive, having pulled back sharply from three-month highs earlier this month.
Investors continue to assess how much of the new “normal” monetary policies major central banks are embarking on could affect global growth after the Fed hiked rates at its highest pace since 1994 last week, aiming to cool down rampant inflation.
Testifying before the U.S. Congress, Federal Reserve Chair Jerome Powell said on Wednesday that the central bank is “not trying to provoke a recession.” However, he acknowledged that a recession was “certainly a possibility” against the current global backdrop.
Meanwhile, U.S. President Joe Biden called for a three-month holiday on federal gas and diesel taxes and urged states to also temporarily drop fuel taxes in an attempt to contain energy prices. Inventory data from the Energy Information Administration was scheduled for Thursday, but the EIA said data would be delayed due to “systems issues,” with no new release date.
The West Texas Intermediate (WTI) barrel continues to back away from the $123 area where it peaked on Jun. 14, hitting a six-week low of $101.56 before steading around $104 on Thursday, 0.6% below its opening price.
From a technical perspective, WTI holds a short-term bearish bias, according to the daily chart. The price has broken below the 100-day SMA while the RSI remains in negative territory, not yet reaching oversold conditions. The MACD is printing larger red bars, showing increasing selling interest.
On the downside, the next support level is seen at the $100.00 area, followed by the May 12 low at $98.23. A break below this, the next level is the Apr. 11 low at $93.00. On the other hand, the next resistances are located at the 100-day moving average, currently at $105.53, and then the $110.00 area, followed by the 20-day moving average, currently at $115.73.