WTI Crude Oil Futures (NYMEX: CL) shed 3.38% in Thursday’s trading session following the release of better-than-expected U.S. economic data. Despite crude oil inventories plummeting by over 12.4M barrels against consensus, indicating resilience in demand, the market priced in a higher chance of a Fed Rate hike in the upcoming meeting, weighing down on risk assets.
Today, the U.S. releases the Core PCE Index, the Federal Reserve’s preferred inflation gauge. Inflation is projected to remain sticky, with a 0.3% gain matching the prior month’s reading.
The WTI Crude Oil Futures have recovered from a steep selloff earlier in the month but remain subdued in a downtrend, with price trading below the 100-day moving average. The market has held resistance steady at the $74.02 per barrel (BLL) level, while higher lows have been established to form an ascending triangle pattern. Support was established at the $63.65 BLL level following the market’s rejection of the year-to-date low.
With pressure building up, represented by narrower highs and lows, bulls and bears could be in contention to take the price in one direction if one side gives in. A high volume breakout above the pattern could indicate that bullish momentum built up beyond that of bears. Bulls will likely consider the $76.90 BLL level a probable point of interest.
Alternatively, if bearish traders fight to maintain the downtrend, a breakdown below the ascending triangle pattern could validate a move lower. The $63.65 BLL level will likely be the next probable target for a bear case.
Given that the OPEC+ oil output cuts are in place with the potential for more in the upcoming June 4th OPEC+ meeting, the WTI Crude Oil prices will likely be supported above the $63.65 BLL level. However, with most analysts and global market commentators weary of a potential recession imminent, there could be the likelihood of further downside.
Sources: Reuters, TradingView