The commodities market took a knock from all the market turmoil caused by the failure of Silicon Valley Bank (SVB), the second biggest bank failure in the U.S. since the Global Financial Crisis. Appetite for risk assets faded as traders turned to safe-haven assets such as Gold and the U.S. Dollar and Bonds, despite the EIA crude oil inventory count suggesting higher demand.  

Brent crude Oil futures’ (NYMEX: BB) short-term price action will be heavily influenced by the Monthly OPEC Report and U.S. CPI set to be released later today, along with the Inventories count, PPI, Retail Sales and Labour market reports set to be released during the course of the week. 

Technical

The Brent crude oil futures market gave into bearish momentum as the uptrend caved with a high volume breakout below the ascending channel and 100-day moving average. Support and resistance were established at the $78.12 and $84.07 barrels (BLL) levels, respectively.  

Following a breakout below a structural support at the $80.37 BLL level, price action extended lower, with bears potentially targeting the next support level at the $78.12 BLL level.  

Bullish traders will likely look to support at the $78.12 level for a rejection and entry opportunities to take brent crude prices higher. With the RSI pointing to oversold conditions, a bullish reversal is probable. If price approaches the level on weakening volume, it could indicate that bearish momentum is dying out. If bullish traders enter the market, they will likely look to the $80.37 BLL level with interest.  

Summary

Today, traders will weigh in on inflation and its likely impact on the Federal Reserve’s Interest rate decision. If inflation comes in over and above consensus, it could prompt a jumbo-sized rate hike by the Fed and weigh down on Brent Crude Oil futures as an economic slowdown becomes plausible. However, downside price action could be offset by enhanced demand from China’s lockdown recovery.  

Sources: Reuters, EIA, TradingView